Business Question

okay so ive been working with my group to write this essay on peleton for my strategic management class. I’ve attached the outline we created as well as what parts everyone else is doing. my part is the “industry analysis section” and it just needs to be two pages long single spaced. I’ve also attached my outline I kinda made as well but feel free to change it because to be honest, It might be wrong

Peloton Industry Analysis Outline
End of COVID-19 and At-home Gym Fads
● Trends Shift: Explore how the end of strict COVID-19 restrictions has impacted
consumer behavior regarding at-home gyms. Highlight the shift back to physical gyms,
outdoor activities, and the challenges these pose to companies like Peloton.
● Adaptation Strategies: Investigate how Peloton and similar companies have adapted to
this shift. This could include diversifying product offerings, integrating outdoor exercise
options, or enhancing social features to maintain user engagement.
The demand for home fitness equipment saw fluctuations post-COVID-19, with a notable
decline in the interest for certain types of equipment going into 2024. Treadmills, weight
benches, dumbbells, ellipticals, and barbells remained popular, although there was a general
downtrend in the search interest for cardio equipment compared to strength equipment.
Interestingly, despite the overall decline in the interest for some equipment, the market for
versatile and compact home gym equipment grew, indicating a shift towards more spaceefficient and functional fitness solutions (Garage Gym Reviews).
The fitness industry faced significant disruptions due to COVID-19, with an estimated $13.9
billion loss from gym and health club closures in the US alone. A substantial portion of gyms
faced permanent closure, and a significant workforce within the industry was laid off. This
upheaval led to a surge in digital and at-home fitness, as people sought alternatives to maintain
their fitness routines. Peloton, among others, benefited from this shift, experiencing a 173% sales
increase during the pandemic. However, the pivot wasn’t universal, with many consumers
missing the community aspect and variety offered by in-person gyms (#1 Athletic Shoe Review
Site) (WellnessLiving).
Post-pandemic, there’s a strong consumer interest in returning to in-person fitness, albeit not
immediately. Nearly all fitness club members express a desire to return, but expect to attend less
frequently than before COVID-19. The recovery timeline is anticipated to vary, with traditional
gyms and boutique studios rebounding at different rates due to varying consumer preferences
and the competition from digital fitness solutions (LEK Consulting).
The pandemic accelerated the adoption of digital fitness, transforming the industry’s future.
Fitness businesses are now navigating the post-pandemic landscape by adopting hybrid models,
integrating digital offerings with in-person experiences to cater to the changed consumer
expectations. This approach not only addresses the demand for flexibility and convenience but
also leverages digital platforms to enhance community engagement and personalized fitness
experiences (WellnessLiving).
The top fitness trend for 2024 is wearable technology, emphasizing the increasing role of devices
that monitor health metrics like heart rate and step counts in enhancing personal fitness. These
technologies support individualized activity tracking and progress monitoring, further
personalizing fitness routines (ACSM_CMS). For more detailed insights into the current fitness
trends, you can explore the information here.
PESTLE Analysis
● Technological: Dive deeper into how wearable technologies and integrated fitness
platforms are evolving. Analyze Peloton’s integration with such technologies and the
competitive edge it provides or lacks.
● Social: Examine the long-term impact of the work-from-home trend on health and fitness
routines. Consider societal shifts towards health consciousness and how Peloton
leverages this trend in its marketing and product development.
● Economic: The economic environment is crucial, especially in a downturn. Analyze
Peloton’s price positioning as a premium service in the context of economic recovery or
recession. How sensitive is Peloton’s customer base to economic fluctuations?
Technological
Wearable technology has swiftly moved from being a novelty to an integral part of our lives.
Initially perceived as gadgets with limited applications, wearables have undergone a monumental
transformation, becoming indispensable in various fields. These devices, once confined to fitness
tracking, have expanded their horizons, revolutionising healthcare, communication, and even
entertainment.
The rapid advancement in sensors, miniaturisation, and connectivity has paved the way for
wearable tech to transcend its initial limitations. Devices like smartwatches, fitness bands, and
augmented reality glasses have seamlessly integrated into our routines, offering convenience,
efficiency, and new possibilities.
One of the most compelling aspects of wearable technology is its impact on healthcare.
Wearables equipped with biosensors can monitor vital signs, track fitness levels, and even detect
potential health issues, empowering individuals to take proactive measures for their well-being.
The communication landscape has also witnessed a significant shift with wearable tech.
Smartwatches and smart glasses not only keep us connected but also offer hands-free interaction,
blurring the lines between the physical and digital realms.
Entertainment and gaming industries have embraced wearables to offer immersive experiences.
From VR headsets that transport users to virtual worlds to smart clothing-enhancing gaming
experiences, wearable tech has redefined how we engage with entertainment.
Peloton’s integration with wearable technologies enhances its user experience by allowing for
health metrics tracking and workout efficiency, which is a significant advantage. This synergy
between Peloton’s content and wearable tech fosters a personalized fitness journey, potentially
increasing user engagement and retention. However, without offering its proprietary wearables,
Peloton might miss direct data control and additional revenue streams. Despite this, its strategy
leverages the widespread adoption of third-party wearables, focusing on its core strength:
immersive, interactive fitness content.
Porter’s Five Forces
● Threat of New Entrants: Evaluate barriers to entry in the at-home fitness market.
Consider technology costs, brand loyalty, and market saturation.
● Bargaining Power of Suppliers: Analyze Peloton’s dependence on hardware suppliers and
content creators. How does this impact its strategic flexibility?
● Bargaining Power of Buyers: Consider the consumers’ power over Peloton, especially in
light of available alternatives and price sensitivity.
● Threat of Substitutes: Identify and analyze direct and indirect substitutes for Peloton’s
offerings, including free online workout classes, outdoor activities, and gym
memberships.
● Rivalry Among Existing Competitors: Examine the competitive landscape, focusing on
direct competitors in both hardware and subscription services.
Peloton’s reliance on hardware suppliers and content creators is crucial for its product quality and
innovation. This dependency might limit strategic flexibility due to potential supply chain
disruptions or the need for continuous content refreshment to keep users engaged.
Consumers have significant influence over Peloton due to the competitive landscape and their
price sensitivity. The availability of alternatives, from more affordable digital fitness platforms to
traditional gym memberships, gives consumers choices that can pressure Peloton to continuously
innovate and adjust pricing strategies.
In the competitive landscape, Peloton faces direct competition from both hardware
manufacturers like NordicTrack and Bowflex, known for their connected equipment, and
subscription services such as Zwift and Apple Fitness+, which offer digital workout experiences.
Market Trends, Customer Insights, and Industry Benchmarks
● Customer Preferences: Investigate current preferences and behaviors of fitness
enthusiasts. This might include the desire for community, personalization, and flexibility.
● Industry Benchmarks: Look at benchmarks such as subscriber growth rates, churn rates,
and average revenue per user (ARPU) across the industry to position Peloton within the
market.
Fitness enthusiasts today are looking for more than just physical exercise; they seek a sense of
belonging and community, often found in group classes or online fitness communities.
Personalization is another key demand, with users wanting workouts tailored to their specific
goals, strengths, and weaknesses. Finally, flexibility in terms of when and where they exercise is
crucial, as people juggle various commitments. These trends reflect a broader view of fitness as
an integral part of a balanced, connected lifestyle.
Potential Growth Outside of At-home Stationary Bicycles
● Product Diversification: Explore Peloton’s potential or existing efforts to diversify its
product line (e.g., treadmills, rowing machines, fitness accessories).
● International Expansion: Assess the opportunities and challenges of geographic
expansion. Which markets are most promising for Peloton, and why?
Turn that into how peloton should emphasize community cycling programs. It helps people get
together, and thats what people want, etc They could take a Geographic expansion route which
presents Peloton with opportunities to tap into new customer bases in regions with high
disposable income and an interest in health and wellness. Markets in Europe and Asia, where
there is a growing middle class and an increasing focus on fitness, appear promising.
Overview of Key Competitors
● Competitor Strategies: Provide a detailed analysis of key competitors, including both
hardware manufacturers and subscription service providers. Consider their market
positioning, strategic initiatives, and how they differentiate from Peloton.
● Market Positioning: Explore how Peloton positions itself in the competitive landscape.
Consider factors such as branding, target demographics, and pricing strategies.
Peloton’s key competitors include NordicTrack and Bowflex in hardware, offering high-quality
equipment with integrated training programs. In subscription services, Zwift and Apple Fitness+
stand out with interactive and diverse workout content. NordicTrack leverages its legacy in
fitness equipment, focusing on technological innovation, while Bowflex emphasizes versatility
and space efficiency. Zwift attracts users with its immersive virtual environments for cycling and
running, whereas Apple Fitness+ integrates seamlessly with Apple products, offering a wide
range of workouts. Each competitor differentiates by focusing on specific strengths like
technology integration, content variety, or equipment innovation, challenging Peloton’s market
dominance.
Peloton positions itself as a premium brand in the competitive landscape, targeting fitness
enthusiasts who value quality and integrated technology. Its branding emphasizes community
and high-end home fitness, appealing to a demographic willing to invest in health and wellness.
Peloton’s pricing strategy reflects its premium positioning, offering comprehensive subscription
services that provide access to a wide range of workouts and features. This combination of
quality, community, and technology integration differentiates Peloton in a market with diverse
fitness options.
Peloton Outline
Names: Aaron Gee, Panachai Chauychoo, Devyn Reynolds, KC Concepcion, Jon Zhi Yu Fung
TOC, initial analysis on positions, industry, problems
● Introduction – Jon
○ Intro to Peloton History, Market Position, Rise to Stardom and start to COVID-19
● Information on Industry (Analysis) – Devyn
○ End of COVID-19 and at home gym fads and current workout trends
○ PESTLE: technological (wearable technologies + integrated fitness platform),
social (work-from-home, health conscious), economic (Peloton is premium
service impacted by economic downturn as people save on non-essential stuff)
○ Porter’s Five Forces
○ Summary of market trends, customer insights, and industry benchmarks.
○ Potential growth outside of at home stationary bicycles
○ Overview of key competitors (For both hardware and subscription), their
strategies, and market positioning.
● Internal Analysis- KC
○ SWOT. Some highlights: highly competitive fitness industry where buyers have
lots of substitutes (Peleton compete with traditional gyms membership, other
digital fitness platforms and other home fitness equipment)
○ VRIO resources, processes and capabilities
■ Patented, state of the art bike technology: instructor led training and
performance tracking
■ Brand recognition established during COVID
■ Integrated platform with subscriptions + mobile app solutions
■ Leading market position established through first mover advantage
● Strategic Problems / Opportunities – Jon and Aaron
○ Outline 3 strategic problems/opportunities with Peloton’s current market strategy
○ Discuss what we deem to be the biggest problem/opportunity
○ Example: Peloton facing demand problems with people going back to traditional
gyms as social distancing ended. Hence, can’t retain existing subscribers (can’t
introduce good features, decline in indoors cycling, pricing difficulties)
● Strategic Recommendations- Panachai
○ Focus on one strategic recommendation
○ Expected competitor response
○ Use supporting documentation and presentation materials
○ Provide a detailed roadmap on key milestones and implementation of our
strategic recommendation
○ Example: Focus on the Peloton brand and brand loyalty instead of improving
technology; expand product portfolio beyond stationary bikes & treadmills; focus
more on community building + customer engagement; introduce new wearable
technologies integrated w/ Peloton platform; licensing Peloton tech to fitness orgs
● Conclusion- Aaron
● Appendix