Peloton reintroduces brand, subscription pricing, and app
If peloton When the company unveiled its 2019 Christmas commercial, which stars a husband giving his wife a stationary bike for Christmas, the commercial was widely criticized as sexist, dystopian and reminiscent of a hostage video.
People outraged the commercial’s characters – an upper-middle-class white family – and said it sent a range of dangerous messages about everything from gender norms to body dysmorphism.
While the controversy eventually faded from the headlines, the public remembered. The ad cemented Peloton’s burgeoning identity as a high-end bike company reserved for a specific type of person with a specific income level.
Now the company is poised to change that perception.
Peloton launches a new marketing campaign on Tuesday that will bill the retailer as a business for everyone, regardless of age, fitness level and income – or whether they’ve spent thousands on an expensive piece of equipment.
The brand relaunch comes just over a year after Barry McCarthy’s tenure as CEO. He has worked to transform Peloton from a hardware-focused company into one that also invests in its app and the high-margin subscription revenue that comes with it.
The company has been on the defensive since McCarthy, a former Netflix and Spotify exec, replaced founder John Foley in February 2022.
The company has worked to contain its gargantuan costs, fix recalls, and find new revenue streams as demand for its connected fitness products slacked and consumers became more cautious about their discretionary spending.
Although the company has yet to return to profitability, it has managed to stem the bleeding. With a new chief marketing officer at the helm, Peloton is ready to re-introduce itself to the world and ditch the image that the holiday ads have burned into some minds.
“We know that outside perceptions don’t match the reality of who we are,” said Leslie Berland, Peloton’s chief marketing officer, who joined the company in January and oversaw the relaunch, in an interview with CNBC. “In the past this company was viewed as a home bike company for fitness enthusiasts, but over the years it has grown into something much bigger and far reaching.”
Peloton is focused on the app
The relaunch comes with a new tiered app strategy that includes an unlimited free membership option (no credit card required) and tiers that cost $12.99 and $24 monthly.
What content users have access to varies by level. In some cases, older users will have less access starting in December, when a grace period ends. Currently, people who pay $12.99 per month to use the Peloton app can take one bike class each day, but only three per month in December.
The relaunch includes a “Gym” feature that allows users to take the Peloton app to the gym and create custom workouts.
Peloton is also saying goodbye to its typical fire department colors of red and black and is opting for a new color mix that is said to better capture the “energy” of training and the “afterglow” associated with it. New branded materials include shades of purple, pink, green and a lighter red.
Peloton’s app takes center stage in a sizzling 90-second marketing video shared with CNBC. It features people of all shapes, sizes, fitness abilities, and ages using it for strength and yoga classes at home, but also in gyms have long been considered a threat to Peloton’s business.
While Peloton presents its bike, running and rowing machines in the clip, it only shows the hardware after about 30 seconds in the video.
The message is a far cry from Peloton’s previous promotional and marketing materials, which have mostly featured ultra-fit athletes using the equipment.
“[We’re] “Now for the first time, I’m convinced that not everyone is going to bring premium Peloton hardware into their homes,” said Tom Cortese, Peloton’s co-founder and chief product officer, in an interview with CNBC. “Our members have a phone, we’re on their phone, they take their phone wherever they want and when they want [the Peloton app] on someone else’s hardware, that’s fine, and if you want to take it to someone else’s gym, that’s great.
Peloton insisted that its focus on selling subscriptions doesn’t mean the company has given up its hardware business, and said the company is on a two-pronged path on both fronts. The new campaign focuses on the app because there is so little advertising for it and market research shows only 4% of consumers are aware of it, the company said.
“When we first started surviving Covid and the press likes to crack down on Peloton, it was ‘everybody’s going back to the gym’ but we know our members were using our products in the gym,” said Jennifer Cotter of Peloton Chief Content officer.
She pointed out that Peloton’s strength training content, not the bike or running classes, is the #1 class type for digital members and #2 among those that have Peloton hardware. It shows how eager users are to consume Peloton content unrelated to his gear.
“When it comes to this initiative, we’re just excited that No. 1, our members will feel reflected and new members will feel like Peloton is for them,” said Cotter. “And then, you know, the tiered structure allows us to welcome people to the top of the ramp.”
Briana Deserio, 32, has been a Peloton member since the pandemic began. She said the brand’s competitive and ambitious appeal originally drew her to buying a bike.
When briefed on the company’s new marketing strategy, she told CNBC that she supports the move and its focus on inclusion. But she said there is an opportunity to make Peloton accessible to everyone, which could dilute the brand.
“It’s like a club and now everybody comes to the club,” Deserio said.
Berland, Peloton’s new chief marketing officer, isn’t worried about the brand losing strength. She said the new marketing strategy reflects what the company already is.
“Our members, our instructors, our courses, our content. That is unchanged. The company has evolved into all of that,” Berland said. “It’s time for the brand and marketing to represent all of that and all of its vibrancy.”
Liz Coddington, Peloton’s Chief Financial Officer, said that creating multiple entry points to the company’s content will set the stage for long-term growth.
“What we’re doing is opening up the entire market that Peloton can address to people who might not have considered us in the past because we haven’t really spoken to them,” Coddington said.
“The ultimate goal is really to get more people into the Peloton ecosystem, no matter how they choose to come, and then help them along the way with how they choose to consume our content over time, be it over the free option or via which we can either use the lower tier or the higher tier or eventually buy or rent our hardware,” she said.
The company hasn’t included potential benefits of the app and marketing strategy in its financial outlook, saying some paid app members are likely to downgrade to the free membership option.
In the past, churn rates spiked briefly when Peloton changed prices, but soon returned to typical levels, she said.
“We’re optimistic,” said Coddington. “But it’s hard to know until we know.”
https://www.cnbc.com/2023/05/23/peloton-relaunches-brand-subscription-pricing-and-app.html Peloton reintroduces brand, subscription pricing, and app
