Age

• According to a survey conducted by Ipsos--the survey was carried out on behalf of Peloton between October 4-8, 2018--three in four Canadians aged 25-64 say that they find it difficult to make time to get to an exercise class and it is "more convenient for them to exercise on their own schedule".
• According to Peloton co-founder & CEO, John Foley, the target demographic of the brand is individuals who do not have "time to go to the gym". Typically, in the United States, those in their 20s and early 30s find the time to work out in gyms, however, older individuals tend to be busier with family and work and are likely to have lesser time to do so. Peloton's target demographic (in 2016) in the United States was 35-65 years old.

Gender

• The Ipsos survey found that "men are more likely than women to mention not having enough time (45% of men vs. 35% of women) or not being able to fit it in with their schedule (30% men vs. 21% women)".
•  One in six respondents said they would like to incorporate indoor cycling in their exercise regime, including 28% 25-34-year- olds. However, the survey results do no provide the gender breakdown (probably because there is little or no gender divide).
• Simply based on the fact that men tend to mention not having enough time to work out more than women, and accounting for the income disparity between the two genders, single users of Peloton equipment are more likely to be men. However, given that the majority of the target demographic is married, and that Peloton equipment is used at home (probably by both genders), it cannot be assumed that men make the purchase decisions. The brand's holiday advertising campaign shows the perspectives of both genders.
• There was no information found that clearly indicated the gender demographics of Peloton equipment consumers in Canada.

Income

• In the United States, Peloton is the "go-to exercise regime for everyone from high profile celebrities and CEOs to busy parents who need a more convenient way to exercise". Peloton consumers have nice homes and the money and space for Peloton equipment. The brand targets affluent consumers and the relatively less affluent consumers who are willing to spend the extra bit on fitness.
• While Peloton's price point clearly indicates that they target the upper class, the company's S-1 form (IPO filing) says they target consumers with household incomes over US$50,000. According to the brand's IPO prospectus, consumers under the age of 35 and with incomes under US$75,000 are its largest growing demographic. Therefore, Peloton also targets non-affluent consumers with household incomes between US$50,000 and US$75,000.
• Peloton's survey, conducted by Ipsos, comprised of a sample of 1,000 Canadians with household incomes of over CA$60,000 (approx. US$45,000). The Ipsos survey respondents income can be assumed to be the same as that of the target consumer in Canada as the company claims to target the US$50,000+ demographic (in the US and other developed nations) in its IPO-related documents.
• The Peloton bike is priced at CA$2,950 in Canada and CA$49 for "access to Peloton Digital's unlimited class subscription".

Marital Status

• The typical Peloton consumer in the United States has children. Given that 56% percent of Canadians aged 25-64 are married and 13% live common law, and considering the cultural similarities between the United States and Canada, the Peloton consumer in Canada is more likely to be married or living with a partner. The Peloton holiday campaign (United States) features a couple.

Education

• There is no information related to the education levels of the target demographic available in the public domain. In Canada, income is correlated to education and luxury products are usually purchased by the affluent; however, our findings suggest that Peloton is also targeting non-affluent consumers. While affluent consumers are most likely to have a bachelor's degree or an advanced degree, the same cannot be said about all households with income between CA$60,000 and high-income levels (based on Canada Census data).

Geography

• Peloton was launched in Canada in October 2018. At the time of the launch, Peloton has plans to open 10 showrooms over a year or year-and-a-half.
• Currently, Peloton has seven showrooms in the provinces of Ontario (Toronto, North York, Mississauga, and Etobicoke), Alberta (Calgary, Edmonton), and British Columbia (Vancouver).
• In the United States, the typical Peloton consumer has a nice large home in the suburbs.

Research Strategy

Hobbies and Interests

• Peloton members enjoy healthy cooking.
• The Peloton blog posts recipes on a regular basis, and the Delish magazine and CNBC have talked about the eating habits of Peloton instructors. The featured dishes consistently emphasize health consciousness and fresh ingredients.

• Peloton members support the LGBTQ+ community. Peloton Pride is an annual event with specially themed classes.
• LGBTQ Peloton members have their own Facebook group. In fact, LGBTQ-friendly people have vocally moved to Peloton after competitor SoulCycle supported President Trump's anti-LGBTQ comments.

Values

• Peloton customers are consistently cited as valuing community. Brad Olson, Peloton's Head of Member Experience, said that "community is integral to our brand and to the Peloton experience".
• Tish Blodget, their Head of Global Brand, said that the company has grown as large as it has as quickly as it has " by building online and offline communities".
• Peloton is often referred to as a "cult brand" and building community is a central focus of cult brands.

• Peloton customers value quality. They're willing to pay more for a high-quality product.

Likes

• Peloton's membership enjoys friendly competition. The Peloton leaderboard is set up so that cyclists can compete against one another and even choose specific types of riders to compete against.
• Peloton customers are highly invested in their instructors as people. They follow them on Instagram, with Robin Arzon, Peloton's head instructor, having over 284 thousand followers. They can be highly defensive when the instructors are questioned and try to meet them in person at Peloton Homecoming each year.
• Peloton customers enjoy listening to music as they exercise. Peloton's IPO statement notes that "music is an important element of the overall content that we make available to" the members and specifies that they will spend a minimum of $13.3 million in guarantee payments on music license agreements in 2020.
• Members of the /r/pelotoncycle/ subreddit post regularly about the app's music.

Dislikes

• Peloton customers have very strong tastes in music. They dislike working out to music they don't enjoy and, after the lawsuit in which a significant amount of music was removed from the service, members vocally complained about it and started using the service less.

• Peloton customers hate being lied to. When Peloton offered "white-glove" delivery, and the company they contracted for delivery caused property damage, members took to social media en masse to complain, forcing the company to do a lot of damage control.

Lifestyle Features

• Peloton customers also tend to engage in many other kinds of exercise. According to the Peloton blog, "active rest days" for Peloton users include yoga, walks, and swimming.
• Peloton customers use social media liberally. According to Brad Olson, 81% of Peloton members are active on Facebook, with new customers invited to join the company's group. The /r/pelotoncycle subreddit has over 22 thousand members while members interact with coaches on Instagram.

Research Strategy

PELOTON MARKETPLACES

• There are 20.18 million Canadians between the ages of 25 and 64. This is the demographic identified by a study performed by the independent market research company, Ipsos, as perhaps the most available market since 70% indicated they would work out more if they could do it at home.
• Peloton is currently leading the market in connected exercise machines and streaming fitness classes. It is the "go-to exercise regimen" of busy parents, CEOs and celebrities.
• Peloton advances its technology by appealing to Canadians who want to workout, but want to do so on their own time and schedules.
• Evenso, Peloton has challenges. It is suing Echelon Fitness LLC for patent infringement as Echelon makes its move into the bike-selling industry, and posted a net loss per share after just rolling out its IPO in 2019.
• One of Peloton's fitness competitors in Canada, SoulCycle, is stepping out of its traditional spin studios to make its cycles available to anyone wanting to purchase one.
•  Two Trends in Peloton's market include the streaming-subscription trend and the trend towards staying at home.
• The streaming subscription trend melts borders and is a $2.1 billion a month industry in the US, and Canada is not far behind, with 73% streaming live on a monthly basis.
• Evidence of the trend toward staying at home by Canadians is supported by the Ipsos survey mentioned above, as the poll was conducted on behalf of Peloton..

RESEARCH STRATEGY

Peloton Interactive, Inc.

History

• The company was founded in 2012.
• It was a privately held business based out of New York, USA until September 25, 2019.  
• It is the world's largest interactive fitness platform with a loyal community of over 1.4 million members.  
• Since its birth, Peloton focused on bringing in top talent to create a new concept in fitness, the cycling workouts.
• Throughout the years, the company has grown from a single location in New York to several locations in the US, UK, and Canada. Their most recent location was opened in Germany in 2019.

Products and Services

• Bikes: rated at 4.8 out of 5. It is a spin bike used for indoor cycling that is made up of carbon steel and aluminum and provides a fully functional cycling experiencing with a choice of multiple gradient levels. The product comes with 90+ live classes that involve real-time instructor shoutouts, an on-demand library with classes that range from 5 to 90 minutes, and accessories such as dumbels, shoes, and earphones.

• Treadmills: The company offers an all-electric treadmill with a 32” 1080p HD touchscreen. The treadmill is built with carbon steel, aluminum slats with rubber overmold, and features a ball-bearing rail system. The product also has an in-built 5 megapixel front‑facing camera and a WiFi 802.11 a/b/g/n/ac & MIMO 2x2 Antenna. The tread comes with daily classes, an on-demand library, and extra bar speakers, bottles, gears, and watches.
• An additional subscription-based app services is provided to all customers. The app provides training videos, on-the-go motivation videos, and GPS support for pace, splits, and elevation metrics on iOS devices.
• Peloton also sells apparel and accessories for men and women such as tops, pants, innerwears, wrap rings, bags, and logo patches.

Key Clients

• Since the company sells all indoor products and services, they focus on individuals who purchase products to maintain a fitness regime at home.
• However, the company has recently partnered with Westin Hotels & Resorts to get its bikes and classes in front of more of its target audience. They have additionally focused on spinning studios like SoulCycle and Flywheel to showcase their products.

Growth

• Peloton has grown strategically since its inception by using the correct evolution of products, attention to right customer base, and a very effective marketing strategy.

• The company had started planning for an IPO since 2017 and successfully filed it on September 25, 2019.

• They were able to achieve a $400 million in revenue in 2017 which represented a two-fold increase since 2016.

• Peloton has been using regular customer insight through surveys, not just to validate pricing and improve products, but to also improve its marketing plans. For example, when the company was first launched, it lacked a compelling brand story and focused mainly on a core, affluent audience. However, through extensive research, they were able to change its messaging and become successful.

Target Market

• The company started by targeting customers that can afford high-price but quality fitness equipment.

• Their main target were the affluent consumers from the US, UK and Canada, with the potential customers mostly coming from the suburbs.
• The company, later expanded to a broader market that consisted of less affluent consumers who can spend an extra for the convenience to get fit at their own pace and place of closing. As such, their primary target audience became the professional or semi-professional athletes who either do not have much time to train in the fitness center or love to maintain a healthy regime at their own pace and leisure time while being indoors.

Funding

• The company received a total of 8 rounds of funding for a total amount of $994.7 million.
• A total of 18 investors were involved in the funding rounds, with 7 lead investors.  
• The business has a valuation of $8.1 billion.  
• Peloton is currently trading on NASDAQ under PTON. Their initial shares amounted to $29 per share.

M&A activity

• The company made two acquisition, Neurotic Media (June 2018) and Gossamer Engineering (Nov 2019).

• Neurotic Media helps brands and mobile companies influence consumer behavior using popular songs and artists while Gossamer Engineering is a full-service, vertically-integrated, product development company.

Expansions

• They initially planned to open five locations in Canada but the number was increased to 10 after the initial success of their Toronto center.
• According to Tim Shannehan, Chief Revenue Officer at Peloton, the Canadian locations feature Peloton branded elements and will ensure that members have the same seamless customer experience as in the US.
• All the Canadian locations are highly interactive, allowing potential members to get on a bike, put on their headphones, and sort through the live and on-demand class library.
• To achieve success, Peloton conducted some research with the help of Ipsos. The findings highlighted that three quarters of Canadians aged 25 to 64 found it difficult to make time to get to an exercise class and that they preferred to exercise on their own schedule. This helped Peloton to adjust its marketing efforts and engage with that particular audience.

Strengths

• Peloton has generated a social trend, where users uniquely bond over the shared love for the service. One reviewer calls it "cultlike".
• Peloton uniquely combines several fitness trends: indoor cycling communities, screens and WiFi.
• The service "bring[s] the boutique indoor-cycling experience (such as what you can get from SoulCycle and Flywheel) into the home, making it convenient for time-strapped business people, stay-at-home parents, and far-flung suburbanites to get in a challenging, competitive, high-tech pedaling session whenever they like."
• The actual bike is designed well, contains a lot of extra features and technology.
• Peloton appeals to a person's competitive side, so despite exercising 'alone' at home, they still have a leaderboard to compete against others or themself.

Weaknesses

• Most of the perceived negatives about Peloton is the steep upfront cost plus ongoing subscription.
• The bike itself has extremely limited functionality (and appeal) if users do not also subscribe.
• The unit only has a limited warranty, which covers the touchscreen, mechanics, parts & service for one year.
• It's possible that Peloton could issue software updates that further limit the bike's functionality for non-subscribers.
• There is no pause function for any of the rides, which does not take into consideration that when exercising at home, sometimes life has interruptions.
• Some users do not like that some instructors use profanity. However, this is clearly indicated by Peloton.

Opportunities

• Peloton boasts an industry-unusual 96% one-year retention rate.
• Peloton recently launched the Peloton Tread, a similar connected treadmill. There is further opportunity to expand to other equipment.
• The company has put its bike in 50 Westin hotels, so users staying there can 'try before they buy'.
• The company recently went public, so increased shareholder investment (and confidence) can help grow both the class and equipment offerings from Peloton. Additionally, increased interest from this could potentially drive down costs.

Threats

• Peloton's main threats are its competitors, which attempt to emulate its offerings at a lower price.
• For example, Echelon starts at only $840, includes a free heart monitor, and uses BYOD (bring-your-own-device) so users can use a tablet they are most comfortable with. Its monthly classes cost is also lower than Peloton.
• Some users prefer this, as if they are not in the mood for class, their tablet can be used 'normally' to watch Netflix or browse social media.
• A few other competitors are from industry-stalwart NordicTrAack (similar price but includes a free year of classes), ProForm (also similar price but with free year) or even a 'conventional' indoor bike rigged to hold one's own tablet.
• Peloton's IPO is also a potential threat to consumers, as so far response has been lukewarm. This could lead to the company's performance affecting new offerings or price increases.