Case Study \u2013 Peloton
\nAs you read the case study, be attentive to Peloton\u2019s successful strategy, the market potential and
\nthe strategic direction of Peloton. Answer the questions below based on the case study. Your
\nanswers should fit in the lines below each question. Be sure to include all the elements mentioned
\nin the article as well as your own knowledge about the fitness industry.
\n1. At its current valuation of $8 billion, what do you think contributed to Peloton\u2019s success?
\n2. The case focuses on pricing concerns. Are Peloton prices justifiable? Should Peloton change its pricing
\nstrategy? Consider how the stock crashed in 2022 and the concerns that surfaced at that time.
\nHow Peloton exercise bikes became a $4 billion fitness start-up with a cult following
\nPeloton is a bonafide fitness phenomenon \u2014 it has a million impassioned users to whom its bikes and original
\nstreaming workouts are a way of life, making it much more than a company that sells exercise equipment, though it
\ndoes that too. In fact, Peloton has sold over 400,000 bikes so far and started delivering its first treadmills in late 2018,
\nthe company tells CNBC Make It. Peloton is changing the way America works out.
\n\u201cPeople are pretty obsessed with Peloton \u2014 myself included,\u201d Robin Arzon, Peloton\u2019s head instructor and vice
\npresident of fitness programming, tells CNBC Make It. Arzon joined in 2014 after reading an article about Peloton
\nthat made her feel like she was seeing the future of fitness.
\n\u201cFrom the beginning, I drank the Kool-Aid,\u201d she says.
\nShe\u2019s not alone. The convenience of being able to take a top-notch studio cycling class on a high tech bike at home
\nany time you want, combined with motivational instructors and a supportive but competitive community of users has
\ncreated a devoted following willing to pay $1,995 for an exercise bike, not including the $250 delivery fee or the $39-
\nper-month subscription to stream the company\u2019s live and on-demand classes.
\nOver 440,000 people follow Peloton\u2019s official Facebook page, where users connect, posting photos of themselves and
\ntheir bikes along with updates on their workout regimens, and superfans have even gotten tattoos of the company\u2019s
\nlogo. You can even count more than a few famous faces among the Peloton community, including actor Hugh
\nJackman, Olympic champion sprinter Usain Bolt and even billionaire Virgin Group founder Richard Branson.
\nInvestors are enamored too, pouring $994 million into Peloton. In fact, the company was valued at a whopping $4.15
\nbillion after its latest funding round of $550 million in August 2018, Peloton confirmed to CNBC Make It.
\nPeloton\u2019s impressive growth \u2014 the company says it\u2019s on track to reach $700 million in revenue for the fiscal year
\nending in February after tallying $370 million in sales the previous year \u2014 and valuation even has public investors
\nsalivating at the idea of a potential Peloton IPO, which could come as soon as this year, though the company declined
\nto comment on that matter to CNBC Make It.
\nSecret sauce
\nIf you ask Peloton\u2019s founders, it\u2019s actually a media-technology-retail-logistics company. In fact it\u2019s been dubbed the
\n\u201cApple of fitness,\u201d but it could also be compared to Amazon, for the way it aims to control every aspect of your
\nworkout, from designing and building the bike or treadmill you\u2019re using to training the instructors encouraging you
\nto pick up the pace and even the music playing in the background. Not to mention creating its own content and
\ndesigning and building the hardware and software that lets you stream those fitness classes on a tablet affixed to a
\nmachine that was delivered to your home by Peloton\u2019s own \u201cdedicated team of professionals.\u201d
\n\u201cWe did talk a lot about Apple early on, and we talk about Netflix and Amazon,\u201d Tom Cortese, one of Peloton\u2019s five
\nco-founders and COO, tells CNBC Make It. \u201cWhen you think about these game-changer companies who have this
\nfocus on user experience, that is where we looked for inspiration.\u201d
\nHe says the co-founders realized \u201cwe just had to touch so many different areas.\u201d
\n\u201cAll of that is part of this, sort of, holistic member experience that our people have come to love, and that is such a
\ncore part of what we do and what makes Peloton special.\u201d
\nIn particular, Peloton\u2019s instructors are part of the secret sauce.
\n\u201cThe way that Peloton has built their instructors into their brand, with many of their instructors achieving a sort of
\ncult status among the Peloton following, I\u2019d say is definitely one of their biggest advantages over alternative at-home
\nfitness equipment and gym and cycling classes,\u201d Marisa Lifschutz, lead industry analyst at research firm IBISWorld,
\ntells CNBC Make It.
\nIndeed, popular instructors like Arzon are one of the main draws, as evidenced by her the nearly 200,000 people who
\nfollow her on Instagram. Arzon is known for her high energy, motivational style and her catch phrase, \u201csweat with
\nswagger,\u201d which is also the name of the tribe of Peloton users who specifically follow her classes. She calls Peloton\u2019s
\ngroup of instructors \u201ca team of superheroes\u201d whose job it is to inspire and lead the community.
\n\u201cWe\u2019ve also built a socially engaging platform in the workouts themselves,\u201d Arzon says. \u201cSo whether you\u2019re getting
\na high-five from a fellow rider or you\u2019re getting a shout-out on your first run … there\u2019s an intimacy there that doesn\u2019t
\nexist most places, certainly not in a space where you\u2019re interacting digitally, and instructors are kind of breaking that
\nfourth wall and in people\u2019s homes. That\u2019s really powerful stuff.\u201d
\nThe feeling seems to be mutual. Sara Richards, 44, a medical writer and mother of four who lives in Los Angeles, tells
\nCNBC Make It that she\u2019d tried SoulCycle a few times, but \u201cwas not very impressed with any of the instructors.\u201d After
\nshe tried Peloton last year, Richards says, she felt more of a \u201cpersonal connection\u201d with the instructors, especially
\nArzon. \u201cWhen she is talking to that screen, she is talking to me,\u201d Richards says.
\n(A SoulCycle spokesperson tells CNBC Make It, \u201cOur growth in consumers and in revenue shows nothing can
\nreplicate our immersive and category-defining experience.\u201d)
\nThe idea of feeling connected to the Peloton community is also a big draw for Richards, she says, as it is for Crystal
\nO\u2019Keefe, a 40-year-old project ( help with nursing paper writing from experts with MSN & DNP degrees) manager at a healthcare organization in St. Louis who hosts a Peloton-themed podcast,
\ncalled \u201cThe Clip Out,\u201d with her husband, Tom.
\nAfter buying her Peloton bike in 2016, O\u2019Keefe immediately loved the competition aspect of Peloton, including
\nwatching herself rise up the leaderboard in real-time on her bike\u2019s touchscreen. And once she started posting in the
\nPeloton Facebook group, she felt embraced by the community to the point that she\u2019s formed friendships with riders in
\nother cities. O\u2019Keefe, who says she\u2019s struggled with weight loss her entire adult life, has lost about 30 pounds since
\nshe started using Peloton.
\n\u201cI never found time to work out consistently before, and between the community and the total availability of the
\nclasses \u2014 I mean, it is nothing for me to work out seven hours a week,\u201d O\u2019Keefe tells CNBC Make It.
\nOf course, Peloton isn\u2019t without its critics. The most frequent knock seems to be its price point, as not everyone can
\npay thousands of dollars along with a monthly membership fee and the cost of equipment (like Peloton cycling shoes
\nthat cost $125 a pair).
\nOn Amazon, standard exercise bikes and treadmills can start selling for just a few hundred dollars. Meanwhile, there
\nare also other at-home fitness apps available on the market, such as personal trainer Kayla Itsines\u2019 Sweat app, which
\noffers streaming workouts and a robust social media community at a cost of less than $120 for a full-year membership.
\nBut there are also plenty of other high-end equipment options that cost thousands (like the $2,000 NordicTrack bike or
\na nearly $5,000 treadmill from Matrix), even without the option to livestream classes. Studio cycling classes can also
\nbe expensive, even without buying your own bike, with SoulCycle charging anywhere from $28 to $36 per cycling
\nclass at various locations around the country.
\nStill, thousands of Twitter users recently swarmed to a thread of posts mocking both Peloton\u2019s price tag and a series
\nof advertisements that feature Peloton products being used only perfect people in their luxurious homes and
\napartments. The viral Twitter thread suggests the ads paint Peloton as little more than a bougie exercise bike for rich
\npeople staring out of their penthouse windows at the poor wretches trying to do yoga in a public park.
\n\u201cThat thread demonstrated that Peloton has officially become part of the cultural conversation,\u201d a Peloton
\nspokesperson told CNBC Make It.
\nHowever, Cortese points out \u201cWe\u2019ve strived to find different entry points into the Peloton system for different folks,\u201d
\nnoting that you can sign up for the monthly Peloton subscription and stream it on a phone or tablet without buying the
\nPeloton bike or treadmill and, if you live in New York, you can take classes at the Peloton studios for $26 each.
\nPeloton also offers a 39-month financing option to buy its bike that costs $58 per month, which is also the average
\nmonthly cost of a gym membership in the US.
\nHow it all started
\nIt\u2019s been over seven years since current CEO and co-founder John Foley invited his former colleague Cortese over for
\ndinner in 2011 to pitch him on the idea that technology could make it possible for time-strapped people to get the full
\nexperience of working out in a high-end studio cycling class in their homes.
\nAt the time, Foley was in his early 40s and married with two young children and a demanding job as an executive at
\nBarnes & Noble in New York, where he\u2019d grown fed up with trying to fit studio cycling classes into his busy schedule.
\nFoley also noticed that what seemed to draw people to those expensive cycling classes was usually a favorite instructor
\nor music playlist more than the brand itself. He wondered if he could make the whole experience more accessible.
\n\u201cJohn kept talking about this idea that it was difficult to find time to fit [fitness] in, it was difficult to find time with a
\ngreat instructor at a great class, and it was incredibly expensive to pay this per-class fee,\u201d Cortese says.
\nFoley and Cortese agreed that an at-home exercise bike outfitted with some sort of screen could allow customers to
\nstream their favorite cycling classes anytime, anywhere.
\nAt the time, Cortese, who is now 39, was really getting into fitness himself, training for triathlons and cycling races,
\nand he\u2019d also recently become engaged and started to think about how fitness would fit continue to into his lifestyle.
\n\u201cit just clicked,\u201d Cortese says.
\nPeloton co-founder and COO Tom Cortese.
\n\u201cWe were going to shift this fitness industry from these commercial gym environments into the most convenient place
\non earth,\u201d he says.
\nFoley secured $400,000 in seed funding from a group of angel investors and the company was officially founded at
\nthe beginning of 2012, with Foley taking a French term for a pack of bicycle racers, \u201cpeloton,\u201d to name their new
\ncreation. From there, it took Foley, Cortese and their three fellow co-founders \u2014 Graham Stanton, Hisao
\nKushi and Yony Feng \u2014 nearly a year to build a test bike using off-the-shelf hardware, including an Android tablet
\nfor the bike\u2019s touchscreen.
\nBy the end of 2012, that test bike proved to be enough to show investors that a high-tech, connected stationary bike
\nthat tracks the riders\u2019 metrics while live-streaming video could work, allowing Peloton to raise another $3.5 million.
\nThey built a real prototype Peloton bike and launched a Kickstarter campaign in the summer of 2013 to create buzz
\naround the bike.
\nIt only took about a month for Peloton to top its Kickstarter funding goal of $250,000, but at $1,500 apiece, Peloton
\nhad still pre-sold fewer than 200 bike, so wanting to appeal to suburban consumers who wouldn\u2019t have as much access
\nto brands like SoulCycle and FlyWheel, Peloton set up a pop-up store in the Mall at Short Hills in Millburn, New
\nJersey, a luxury shopping mall roughly a 40-minute drive from Manhattan.
\nCortese remembers \u201chigh-fiving that we had sold, maybe, five units in a single day,\u201d he jokes. \u201cBut it … allowed us
\nto be in there providing our message to every customer who walked by.\u201d
\nSlowly, buzz for the brand started to build. Over the next year, Peloton opened seven stores in California, New York,
\nMassachusetts and Virginia, while sales continued to tick upward. Peloton\u2019s sales in the first two months of 2015
\nmore than doubled the company\u2019s expectations, and that spring Foley said that he expected to have sold a total of
\n10,000 bikes by the end of the year.
\nAs the company continued to grow, more investors took notice. Two separate funding rounds in 2015 raised a total of
\n$105 million, which was roughly seven times the company\u2019s total prior fundraising.
\nBy 2016, Peloton had booked $60 million in annual revenue, and Cortese now tells CNBC Make It that Peloton\u2019s
\nsales \u201cessentially double or triple every single year\u201d going back to 2014.
\n\u201cWhat\u2019s amazing about our growth is just this past year, 2018, we had at least one day where we sold as many units
\nin that single day as we did in that first year of 2014,\u201d Cortese says.
\nChanging the industry
\nPeloton now has 70 brick-and-mortar Peloton locations across the US, Canada and UK and three Manhattan studios
\nfor live-streamed and on-demand classes, and the company has plans to open a new, 35,000-square-foot flagship
\nlocation in Manhattan this coming fall to house several fitness studios.
\nA Peloton instructor leads a cycling class at the company\u2019s studio.
\nSource: Peloton
\nThe company already employs 26 total instructors, streams over 20 live classes per day and offers over 10,000 classes
\non-demand (varying in length from 15 minute workouts to hour-long sessions) \u2014 with plans to continue expanding
\ninto new fitness areas after recently adding running, yoga and strength training classes.
\nThe running classes started in May 2018 to complement the newly-released Peloton Tread, a $3,995 treadmill that the
\ncompany started shipping to customers in the fall. The company has not released sales numbers for the Tread yet, but
\nCortese says the product has had an \u201coverwhelming early reception\u201d from customers.
\nStill, much like Peloton\u2019s bikes, the Tread has been criticized for its price tag, with one review calling it \u201cprohibitively
\nexpensive.\u201d Peloton stands by the value of its product, though. \u201cWe believe our product is comparable, if not a much
\nbetter value, than other high-end treadmills on the market,\u201d said the Peloton spokesperson.
\nAnalyst Lifschutz notes that Peloton\u2019s market share in the gym and exercise equipment manufacturing industry has
\ngrown from essentially nothing when it launched in 2014 to 7.3 percent by 2019. IBISWorld forecasts for Peloton to
\ngrow its annual revenue to more than $999 million in 2019. And Lifschutz adds that \u201cPeloton just represents the
\ndirection the industry\u2019s heading towards.\u201d
\nPeloton\u2019s influence on its competitors is already clear. Rivals like NordicTrack and Flywheel have launched their own
\nsubscription services to stream cycling classes at home. In the case of Flywheel\u2019s FLY Anywhere service, its 2017
\narrival spurred a 2018 lawsuit from Peloton that claims the company copied its proprietary design, which Flywheel
\nhas denied.
\n(Peloton declined to comment on ongoing litigation. A Flywheel spokesperson said, \u201cFlywheel firmly denies the
\nclaims raised by Peloton and strongly believes that its Anywhere product does not infringe any valid claim of Peloton\u2019s
\npatents\u201d and it intends to \u201cvigorously stand up for ourselves against Peloton\u2019s claims.\u201d)
\nMeanwhile, multiple other at-home fitness brands have sprung up in recent years, offering a similar message of
\nconvenient workouts through technology, including Mirror, Tonal and connected rowing machine startups Hydrow
\nand CityRow.
\nLooking ahead, Peloton has no plans to stop growing. In addition to expanding the number of types of fitness classes
\nit streams to users, Peloton has also been trying to reach its users in new places. Peloton launched in the UK and
\nCanada for the first time in the fall, and the company has even dipped its toes into the hospitality industry through a
\n2017 partnership with Marriott\u2019s Westin Hotels & Resorts that puts Peloton bikes into dozens of hotels throughout the
\nUS.
\nSay Cortese, \u201cWe think we are just at the beginning of this business.\u201d
\nDisclosure: CNBC parent Comcast-NBCUniversal is an investor in Peloton.<\/p>\n
————–<\/p>\n
Peloton Case Study
\nAs you read the case study, keep an eye out for Peloton’s successful strategy, market potential, and other relevant information.<\/p>\n
Peloton’s strategic direction Based on the case study, answer the questions below. Your<\/p>\n
Answers should be typed in the lines provided below each question. Make certain to incorporate all of the things mentioned.<\/p>\n
throughout the essay, as well as your own fitness industry knowledge<\/p>\n
1. What factors do you believe contributed to Peloton’s success, given its current valuation of $8 billion?<\/p>\n
2. The case is concerned with pricing issues. Are Peloton’s prices reasonable? Should Peloton’s pricing change?<\/p>\n
strategy? Consider how the stock collapsed in 2022, as well as the concerns that arose at the time.<\/p>\n
How Peloton exercise cycles grew into a $4 billion fitness start-up with a cult following<\/p>\n","protected":false},"excerpt":{"rendered":"
Case Study \u2013 Peloton As you read the case study, be attentive to Peloton\u2019s successful strategy, the market potential and the strategic direction of Peloton.\u2026<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9033,7586,1386,7589,9034,9031,7587,7588,7584,7585,9032],"tags":[8809,7838,8811,8808,8813,8807,8806,8814,8810,8812],"class_list":["post-108004","post","type-post","status-publish","format-standard","hentry","category-assignment-help-uae","category-best-dissertation-writing-service-in-australia","category-best-research-paper-writing-services-in-usa","category-capstone-project-writing-service","category-cheap-essay-writing-services-china","category-essay-writing-service-usa","category-legitimate-phd-dissertation-writing-services-usa","category-term-paper-writing-service","category-thesis-writing-service-in-canada","category-uae-best-dissertation-writing-help-service","category-write-my-essay-australia","tag-best-master-thesis-writing-service","tag-best-thesis-writing-services","tag-cheap-thesis-writing-services","tag-master-thesis-help","tag-master-thesis-writing-service","tag-thesis-help-online-free","tag-thesis-writing-help-online","tag-thesis-writing-services-cost","tag-thesis-writing-services-near-me","tag-thesis-writing-services-reviews"],"_links":{"self":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/108004","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/comments?post=108004"}],"version-history":[{"count":0,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/108004\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/media?parent=108004"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/categories?post=108004"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/tags?post=108004"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}