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Tonal is an American company that provides professional at-home fitness programs to save customers’ time and effort commuting to physical gyms. Their company falls under NAICS code 339920 and 513210 (United States Government, 2022). This home solution for fitness reached its peak demand in the United States (USA) during the COVID-19 pandemic, but now faces a stagnant growth rate and a decreasing profit margin. Due to this downward trend, Tonal’s executive team decided to enter a new market to increase the profit margin and earn at least 10% market share in this new market within three years after this entry. Tonal chose the United Arab Emirates (UAE) as their expansion market but have struggled to develop an entry strategy. Tonal has contracted the IB Consulting Group to develop a strategic proposal for entering the UAE. Tonal has asked to assist them with their ambitious goal to mount its product in one-third of all wealthy Muslim households in the UAE. This report will provide three alternatives and evaluate the risks and concerns Tonal will face.
Context – Company and Market Background
Tonal is an at-home fitness solution that offers a compact and versatile home gym experience with its AI-powered strength training system. The target market for Tonal primarily consists of busy professionals, fitness enthusiasts, and anyone looking for a convenient and effective way to work out at home. Tonal’s primary target market is individuals who value convenience and flexibility in their fitness routines. The Tonal system allows users to work out at any time, without needing to leave their home or schedule appointments with personal trainers, making it an appealing option to busy professionals. The AI-powered system adapts to each user’s strength level and offers a variety of workouts, making it suitable for both all levels of fitness enthusiasts. In addition, Tonal offers a welcoming and non-intimidating environment for users to work out in, making it an excellent option for individuals who may feel uncomfortable in traditional gym settings. Mainly, Tonal’s target market consists of 25-34 year old men and women in America. (Similarweb, 2023). This demographic is more likely to prioritize health and wellness as well as invest in high-quality products and services that align with their values. Tonal’s sleek design, customizable workout programs, and personalized coaching options appeal to this demographic. By targeting this demographic, Tonal will be able to better establish itself as a leader in the at-home fitness industry, offering a compelling alternative to traditional gym memberships.
The at-home fitness market has been growing steadily over the years, and Tonal has been a key player in this growth. According to recent market research, the at-home fitness market was valued at 5.5 billion dollars in 2019 and is projected to reach 11 billion dollars by 2027, registering a CAGR of 7.8% from 2021 to 2027 (Allied Market Research, 2021). The increase in health awareness, prevalence of obesity, and rise in health consciousness has changed the demand for at-home fitness equipment. Treadmills, stationary cycles, and free weights are some of the commonly used machines for at-home fitness. COVID-19 was a short-term factor that had long-term benefits for this market, as it encouraged more people to exercise at home. Government initiatives to promote a healthy life, and the link between physical and mental health, have also contributed to the growth of this market. The market is segmented into cardiovascular training equipment and strength training equipment, with the sub-segment of cardiovascular owning the majority of the market. Tonal is unique in that it encapsulates both segments, and the increase in AI research and machine learning technology in at-home fitness equipment is also contributing towards the market’s growth.
Too Tired? Too Anxious? Need More Time? We’ve got your back.