- Peloton unveiled a new marketing strategy designed to capture new customers.
- The company is introducing a new tiered pricing structure for its digital app which includes a free membership option.
- “(We) are now leaning for the first time on the idea that OK, not everyone is going to bring high-end Peloton hardware into their house,” Tom Cortese, co-founder and chief product officer of the company, told CNBC. Platoon.
When Peloton unveiled its 2019 holiday ad depicting a husband who gave his wife a stationary bike for Christmas, the ad was widely slammed as sexist, dystopian and reminiscent of a hostage video.
People took umbrage at the ad’s characters – an upper-middle-class white family – and said it sent a series of dangerous messages about everything from gender norms to body dysmorphia.
While the controversy eventually faded from the headlines, audiences remembered it. The announcement solidified Peloton’s fledgling identity as a premium bike company reserved for a certain type of person at a certain income level.
Now the company is ready to change that perception.
Peloton is launching a new marketing campaign on Tuesday that pitches the retailer as a business for anyone, regardless of age, fitness level and income — or if they’ve shelled out thousands for expensive gear.
The relaunch of the brand comes just over a year after Barry McCarthy’s tenure as CEO. He worked to transform Peloton from a hardware-focused company into one equally invested in its app and the high-margin subscription revenue it brings.
Ever since McCarthy, a former Netflix and Spotify executive, replaced founder John Foley in February 2022, the company has been on the defensive.
It scrambled to rein in its gargantuan costs, address recalls and find new revenue streams as demand for its connected fitness products slowed and consumers became more cautious about their discretionary spending.
While the company has not yet returned to profitability, it has managed to stop the bleeding. With a new chief marketing officer at the helm, Peloton says it’s ready to reenter the world and shed the image that the holiday announcement has etched in some minds.
“We know that the outside perception doesn’t match the reality of who we are,” Peloton chief marketing officer Leslie Berland, who started with the company in January and led CNBC, told CNBC in an interview. the comeback. “This company has always been thought of as a home bike business for fitness enthusiasts, but over the years it has evolved into something much bigger, much broader than that.”
The relaunch comes with a new tiered app strategy that includes an unlimited free subscription option (no credit card required) and tiers that cost $12.99 and $24 per month. It includes a “Gym” feature that allows users to take the Peloton app to the gym with them.
Peloton is also saying goodbye to its fire truck red and black colors in favor of a new mix of hues that it says better captures the “energy” of a workout and the “afterglow” that comes with it. Brand new materials include shades of purple, pink, green, and lighter red.
In a flashy 90-second marketing video shared with CNBC, Peloton’s app takes center stage. It shows people of all shapes, sizes, physical abilities and ages using it to take strength and yoga classes at home, but also in gyms, which have long been seen as a threat to Peloton’s business. .
Although Peloton showcases its Bike, Tread, and Row machines in the clip, it doesn’t show the hardware until about 30 seconds into the video.
The message is a far cry from Peloton’s earlier advertisements and marketing materials, which primarily featured ultra-fit athletes using its equipment.
“(We) are now leaning for the first time into the idea that OK, not everyone is going to bring high-end Peloton gear into their house,” said Peloton co-founder and chief product officer Tom Cortese. , to CNBC in an interview. . “Our members have phones, we’re on their phones, they take their phones wherever they want to go and if you want to put (the Peloton app) on somebody else’s gear, that’s fine, and if you want Bringing it into someone else’s gym is great.”
Peloton insisted that a focus on selling subscriptions did not mean it had abandoned its hardware business, and said the company was on a dual track with the two. The new campaign focuses on the app because there has been very little publicity about it, and market research shows only 4% of consumers are aware of it, the company said.
“When we started coming out of Covid, and the press likes to be tough on Peloton, it was ‘everyone’s going back to the gyms,’ but we know our members were using our products in the gym,” said Jennifer Cotter, Peloton’s content director.
She pointed out that Peloton’s strength training content, not its cycling or running classes, is the #1 type of class for digital members and #2 among those with Peloton gear. This shows how eager users are to consume Peloton content that has nothing to do with their gear.
“As far as this initiative goes, we’re just thrilled that No. 1, our members will feel reflected and new members will feel like Peloton is for them,” Cotter said. “And then, you know, the tiered structure allows us to accommodate people at the top of the ramp.”
Briana Deserio, 32, has been a member of the Peloton since the early days of the pandemic. She said the competitive and ambitious appeal of the brand initially led her to buy a bicycle.
When briefed on the company’s new marketing strategy, she told CNBC that she supports the move and its goal of being inclusive. But she said there was a chance that making Peloton available to everyone could dilute her brand.
“It’s kind of like a club and now everyone 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. It’s unchanged. The business has evolved into all of this,” Berland said. “It’s time for the brand and marketing to represent all of that and all of its vibrancy.”
Liz Coddington, chief financial officer of Peloton, said creating different entry points to the company’s content will set it up for long-term growth.
“What we’re doing is we’re opening up the total addressable market at Peloton to people who may not have considered us in the past because we didn’t really talk to them,” Coddington said.
“The real goal is just to bring more people into the Peloton ecosystem the way they want, and then help them on their journey to how they want to consume our content over time, whether that’s through the free option, either through the lower tier or through the upper tier or possibly by purchasing or renting our hardware,” she said.
The company did not factor the app’s potential benefits and marketing strategy into its financial outlook, and said some paid app members would likely switch to the free membership option.
In the past, churn rates briefly increased when Peloton changed prices, but quickly returned to typical levels, she said.
“We’re optimistic about it,” Coddington said. “But it’s hard to know until we know.”