Peloton Marketing Final Project

III. Executive Summary Prior to founding Peloton, John Foley was president at Barnes & Noble, he was overseeing its ecommerce business. According to Foley, the concept of Peloton came when he was having a hard time balancing work, family, and fitness classes. He did not have the capacity to attend his fitness classes which caused him to revert to his home bike. Peloton is a hardware-plussubscription company that creates and distributes fitness devices, specifically Peloton Bike, Tread, and its recently launched Peloton Bike+. Peloton focuses mainly on allowing its customers to be able to achieve their fitness goals and be a part of an engaged community while being in the comfort of their home. While at-home cycling has been around for a long time, Peloton has been able to turn a one person’s hobby into an activity where different people of different backgrounds can interact with one another therefore creating a community. Unlike its competitors, Peloton encourage engagements among users by initiating a race against each other. Peloton is mainly focused on individuals between age 35-65, these are mostly individuals who makes a minimum of $75,000 in a year, therefore allowing them to buy more luxurious item such as Peloton. While individuals under age 35 are their fast-growing demographic. While it is true that Peloton is rapidly making progress, its competition has also been inspected, putting into account that there are many other options for consumers to choose from. It is very crucial to know the advantages Peloton possess and how it could develop tactics and products to gain more loyal customers. To effectively conclude Marketing plan, I believe it is of the ought most importance to perform a situational analysis by using a SWOT analysis. The strength, weakness, opportunities, and threats are all very important components to investigate when considering how to properly execute marketing strategies to best fit the need of the company and its customers. Even though Peloton has large following, it is important to highlight the fact that it is currently only available in four countries which is Canada, USA, UK, and Germany. I will be executing the Marketing plan by using the four Ps of marketing, promotion, product, place, and price. Each component will explain how Peloton can gain more following and increase it revenue by at least 20% in coming years. IV. Target Market To fully understand Peloton’s target market, there needs to be a comprehensive knowledge of what Peloton stands for. Peloton is a luxurious workout brand, that focuses it market on individuals who are willing to and ready to pay even if through installment. This makes me conclude that Peloton is marketed towards individuals who are constantly busy but wants to have time to get their workout in. Market segmentation is very important because it can power product development cycles by helping companies create products that fits in different segments therefore boosting the company’s profit. Having a segmented target market creates a smooth vision for how Peloton will increase it sales and expand its business across the world. A. Market Size & Segment The first important segment to inspect will be adults trying to balance work, social life, family, and other responsibilities. These are people between the ages of 35-65. This is to say that these are individuals who have children, have nice homes, have money and space but do not necessarily have time with the average income of $75,000 minimum. These are individuals who can only afford to spare 30 minutes of their time in a day to work out before rushing off to another important event. The 30 minutes that they are sparing could be a family bonding time where they get to work out with family members, or it could be an alone time where they get to cool off from every other surrounding pressure. Another important segment would be athletes and students. With its app only subscription of $12.99 per month it is possible for college students to get the experience of using Peloton without the equipment. While a lot of students will be working out for the fun of it, athletes are more organized and detail oriented with their workout routine. Athletes are individuals who value fitness, health, time-management, and work; and to be able to reach their full potential many will hire a personal trainer without the hassle of having to go to a traditional gym setting. With that in mind a professional athlete will not mind the amount of money it will cost them if it means that they will have the opportunity to reach their goal, which is also their job. Although athletes main focus is reaching the potential needed for their jobs, it is also important to keep in mind that they care about aesthetic and how products will blend in their homes and surroundings. Now that Peloton’s market segment has been identified, it will of great importance to identify their marketability, to make the best decision on which market to pursue. In a process of target marketing, I will be comparing both market segments because this is essential in marketing Campaign. B. Selected Target Market With the world constantly evolving towards e-learning and online activities, a lot of people including young adults will prefer bringing their workout home with them. I believe that Peloton’s current target market is very doable because its steers towards people that can afford it. While already focusing on people ages 35-65 with income of $75,000 per year minimum, it will be of a great advantage for Peloton to start creating an image that will bring in younger generation. With new generation come new interest and new perspectives, not only will Peloton have products that appeals to older generation, but it will also have products that cannot be overlooked by younger generation. Considering the huge following that Peloton has online been it through Facebook, Instagram, or Twitter it will be beneficial for Peloton to start expanding its market across countries such as China with 81% workout rate, Mexico with 83% workout rate, India with 85% workout rate, etc. because these countries held large percentage of fitness conscious individuals. V. Competition While it is true that Peloton is rapidly growing, its growth is limited to USA, UK, Canada, and Germany and has a narrow product range. Meanwhile, there are other organizations just like Peloton are not only positioned in few countries but have wide ranges of product. The goal of this assignment is to highlight how Peloton is different from other existing alternatives and how it creates better value than others. Current Alternatives Mirror also known as Curiouser was founded in 2016 and offers high-tech mobile learning to enhance users’ health. It also offers LCD displays that allows fitness trainers to see individuals in their home for one-on-one training. Mirror serves as direct competition for Peloton because its offers similar services like that of Peloton. Mirror’s founder and CEO, Brynn Putnam came up with the idea while traditional gyms where still fully open and while she was pregnant. Unlike John Foley, she started got the idea of Mirror because she felt like working out at home while using high-tech equipment instead of sacrificing quality for convenience. While Peloton is only available for certain countries, Mirror can ship around the world which in turn makes it one of the biggest competitions for Peloton. The concept of Mirror is very similar to Peloton because they both offer coaches that leads workouts and gives feedbacks, customers can choose their workout trainers based on workout preferences, and it fits right into customers’ schedules. Although, since Mirror only offer fitness genre such as tai chi, kettlebell, boxing, kickboxing, and dance they are not really based on weight loss methods. This is the part where Peloton gets a leg up in this competition, with a lot of people focusing on weight loss nowadays, Peloton can popularize its endurance and low-impact rides that last up to 90 minutes for weight loss. Peloton bikes allows customers to do more endurance workouts which overtime burns calorie and have less impact on customers joints. Launching more diverse classes, sessions, and workout routine in different places around the will increase Peloton’s profit and pull in more customers of different age groups. VI. Situational Analysis To effectively conclude the planning phase of a marketing plan, it is important to conduct a situation analysis by using SWOT. SWOT highlights the company’s internal strengths and weaknesses, and the external factor such as opportunities and threat. Strengths: Loyal Customers – Since launching Peloton, it has acquired over 5.9 users with 2.3 million connected fitness subscribers. Not to mention its over 1.5 million Instagram followers, over 198.8k followers on Twitter, and over 800,000k followers on Facebook which gives it more leverage in the competition. Brand Recognition – Peloton has been known for strong brand recognition, especially in the United States. Peloton has successfully been able to manufacture exercising equipment and combining it with latest technologies so that users are able to have a subscription-plus-service based fitness solution. Well-built product lines – Peloton has successfully put together hardware and software, fitness equipment and fitness classes to fit customers interest and preference. With Peloton, customers have access to live and on-demand fitness classes. Rapid Growth – Compared to its competitors, since it has entered the market, Peloton has since rapid and growth in its revenue and customer base. With the way Peloton has grow it has created an advantage because it provides velocity for more growth with customers, revenues, employees, and finances. Weaknesses: Exclusive/ Narrow Product Range – If placed in comparison with its competitors, Peloton only has two hardware products for fitness training which is Bike and Tread while other companies are doing other fitness training such as yoga, kettlebell, boxing, etc. It also has a slim range of accessories and apparel. Limited Geographical Market – Currently, Peloton only exists in four countries which is Canada, United States, United Kingdom, and Germany with the hope of going into the Australian market this year. Although they have huge following and high customer retention, they have not extended larger markets. Third Parties’ Dependency – While it makes sense to rely on third party delivery partners to cut down on expenses, Peloton relies on showrooms to showcase it products when needed which is not a good look for a company. The company also depend on third party companies for services such as music, logistics, and suppliers which means that they lack total control over how they will compromise with third parties in terms of operation, efficiency, quality, and effectiveness. Opportunities: Geographical Expansion – It will be of a great benefit for Peloton to open its branch or franchise globally in marketplaces. A lot of people around the world will be opportune to have solution that Peloton provides. There are rich and busy people everywhere, it will be beneficial for Peloton to launch in countries such as India, Mexico, and China. Product Diversification/ More Hardware – Since Peloton has started by introducing its treadmill, bike, and bike+ it will be very advantageous if Peloton introduce devices such as rowing machine, a connected elliptical, a connected cross trainer, and a connected weight machine. Doing this will differentiate Peloton from its competitor and will equally bring more revenues. Threat: Rigid Competition – Brands other than Peloton heavily rely on hardware such has bikes and treadmills. Over the years, there are new entrants coming into this market and might therefore threaten Peloton in the long run. It is important that Peloton can protect its place by increasing barriers and guarding its market share against competitors. VII. Marketing Plan Objective The goal of this marketing plan is to help Peloton with expanding its geographical ranges and its products so that it can reach more customers around the world, therefore bringing more sales revenue. Although the company is growing at a rapid rate, it only limited to four countries which is Canada, United States, United Kingdom, and Germany. With more geographical diversification and more product lines there is going to be room for more growth and revenue. VIII. Execution – Marketing Tactics A. Promotion: For a digitally focused company like Peloton, it is a necessity to have a social media presence that is interactive and appealing to its customers. The customers in which Peloton is targeting are very familiar with the ins and out of social media therefore communicating changes and improvement in products and services will be straightforward, it will also be cost effective because many social media outlets are free compared to magazines, articles, or radio advertisements. Social media is also global which is what Peloton is aiming for, when done right, promoting on social medial will allowing the company to reach corners of the world that could potentially be the cause of more customers therefor increasing revenues. While it is clear that Peloton is targeted towards people between the ages of 35-65 it will be advantageous for Peloton to begin reeling in younger generations by expanding its products range to appeal to younger generation while also providing the older generation with the products that excites them. Putting into consideration that most athletes now are of the new generation, many young adults are also in tech which means by the time they turn 35 years old there is a possibility that they will be making more than $75,000 per year, and the fact that many young adults nowadays pay more attention to aesthetic and how products blend in their environment. In addition, the newer generation are also very likely to appreciate working out in the comfort of their homes as long as it means not going outside. When it comes to reeling in its fast-growing market (ages 18-35) it is important to note that social media is constantly changing and improving. To get the attention of newer generation it is crucial to medias like TikTok to make interactive, educational, and funny videos, Pinterest to post inspirations, Instagram, and Twitter. While the older generation are more towards Facebook, Twitter, Radio, and sometimes Newspapers, the newer generation are more towards TikTok, Pinterest, Twitter, and Instagram. With newer target market comes newer expectations and increase public following. B. Product/ Services Peloton is already great with the quality of its products and only needs to make it more diverse and less narrow. Currently, the most popular products with Peloton are bike, treadmill, and bike+. I believe when pulling in newer target it is important to bring exciting products and looks. For instance, Peloton can work towards introducing its own connected row machine, connected cross trainer, connected weight machines, and connected ellipticals. Although this could prove to be very costly, I believe it will make Peloton unique from its competitors. Throughout the year Peloton has become more and more affordable which means moving down bikes and treadmills to be more affordable and then moving up new products at a slightly higher rate than the previous treadmill and bike price. I also believe it will be great for Peloton to develop season apparels and accessories style for working out that are based on different countries’ style. This will be a unique twist to the already known Peloton standard because it will create a new standard that competitors must meet. By the time other companies will be striving to reach this point Peloton will already be way ahead in developing and introducing new products. C. Place: To cut down on cost and to focus on providing excellent and efficient service, I will recommend that Peloton do not open locations in every single country, only in countries with higher chances of using and purchasing its products. If Peloton becomes a company that fully operates with subscriptions-plus-services and products it will have better insight in compromising with its third parties’ efficiency, quality, effectiveness, and management. With that being said, Peloton is not only limited a certain location. Although Peloton is already doing great as is, I would recommend having pop-up shops at 3 new locations around the world every other year. Each year when approaching the period for the pop-ups, customers in picked locations will have the chance to get a ticket, and the amount of ticket bought in those locations will be the first determining factor of how Peloton will do in those locations. The main purpose of this pop-up shop is to scan for a potential new market location. D. Price: To keep Peloton affordable yet Luxurious, I am proposing that Peloton change it price ranges. First, I would recommend changing the App only experience from $12.99 per month to free with limited accessibilities. Then, if customers do decide to change from the free app experience to experiencing the full app experience, it will be better to set the price to $20.00 per month because it is now improved and has many more training other than biking and treadmilling. Second, be introducing a new product at a slightly higher price than Bike+. For instance, Peloton Bike+ is starting at the price $1,995.00 and if paying in installment it will be set at $47.00 per month. The new Product will be priced at a starting price of $2,255.00 and if paying in installment it will be set at $55.00. With the way the price is already laid out, customers will have the option of subscribing to Peloton All-Access membership at a price of $45 per month with the inclusion of the new product instead of $39 per month. With the introduction of new products and improved app services customers that are already a member will be directly informed of the new update. In this case customers who are already familiar with Peloton will want to experience the new and improved Peloton. IX. Summary By introducing more products line, and expanding locations globally, Peloton will be able to increase sales in the next coming years. With the use of social media Peloton can introduce a more diverse sets of workout genre such as dance, yoga, and Pilates to support its strength and endurance 90 minutes cycling classes for weight loss.