Peloton Adds New Products and Cuts (Some) Prices

The pandemic has been tough on most companies. Consumer demand for products has shifted, as well as buying behavior. Some companies won’t make it successfully through this period. However, unlike other companies, Peloton seems to have weathered the Covid-19 pandemic very well. Sales for home fitness equipment have been strong as gyms and fitness centers have closed or limited the number of patrons in their facilities.

Recently, Peloton expanded its product line with new versions, and has cut prices on older equipment by roughly 16%. Peloton currently sells two primary types of exercise equipment: a stationary bike priced at $2,245 and a treadmill priced at $4,295. When the new products launch, the new Peloton Bike+ will be $2, 495, but the older bike will be reduced to $1,895. The new bike will accommodate more than just biking and includes upgraded cycling, a better sound system, and a 24-inch touchscreen that swivels for yoga or weight training in a different area.

The new treadmill will be cheaper at $2,495 compared to the existing treadmill at $4,295. The new prices are intended to extend the customer base while still offering high-margin products.

Peloton continues to offer “connected fitness” to its subscribers, linking them to instructors and other workout fans so that even when working out alone at home, customers can connect with a community of other riders and instructors. Monthly subscription memberships are $39/month and the company currently has roughly 866,000 subscribers. In addition to cycling classes, the company streams yoga instruction, strength training, running, and more workout programs.

Ready to ride?

Group Activities and Discussion Questions:

  1. Discuss industries impacted by Covid-19. Which companies are winners? Losers?
  2. How has the pandemic impacted Peloton?
  3. Show Peloton’s Web site: https://www.onepeloton.com/
  4. What is the impact of the new products and price reductions for older products?
  5. Compare a Peloton bike and subscription to the average gym membership. What are advantages and disadvantages?
  6. Divide students into teams and have each team research and compare Peloton’s products and services to its competitors:
    1. NordicTrack: https://www.nordictrack.com/
    2. Echelon Fitness: https://echelonfit.com/
    3. Mirror: https://www.mirror.co/
    4. Tonal: https://www.tonal.com/
  7. What pricing strategies is Peloton using? Will this be an advantage or a disadvantage compared to the competition?

Sources: Associated Press; New York Times; Wall Street Journal; other news sources

 

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