Peloton aims to rebrand as a fitness company for everyone with a focus on tiered app and subscription pricing

When Peloton unveiled its 2019 holiday commercial depicting a husband gifting his wife a stationary bike for Christmas, the ad was widely criticized as sexist, dystopian, and reminiscent of a hostage video.

People resented the business figures — an upper-middle-class white family — and said they sent a raft of dangerous messages about everything from gender norms to body dysmorphia.

While the controversy eventually faded from the headlines, the public remembered. The ad cemented Peloton’s fledgling identity as an upscale bike company intended for a certain type of person at a certain income level.

Now, the company is ready to change that perception.

Peloton on Tuesday launched a new marketing campaign that bills the retailer as a business to anyone, regardless of age, fitness level, and income — or whether they’ve paid thousands for an expensive piece of equipment.

The relaunch of the brand comes just over a year into Barry McCarthy’s tenure as CEO. He’s worked to transform Peloton from a hardware-focused company into one that invests in its app and the high-margin subscription revenue it brings.

Since McCarthy, a former Netflix and Spotify executive, replaced founder John Foley in February 2022, the company has been on the defensive.

It has worked to rein in its skyrocketing costs, process recalls and find new revenue streams as demand for related fitness products slows and consumers become more cautious about their discretionary spending.

While 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 says it’s ready to reintroduce itself to the world and shed the image that the holiday ad has sparked in some minds.

“We know that external perception does not match the reality of who we are,” Peloton chief marketing officer Leslie Berland, who started with the company in January and led the relaunch, told CNBC in an interview. “Historically, this company was seen as a home bike company for the fitness enthusiast, but over the years, it has evolved into a much larger, broader company than that.”

Peloton is focused on the application

The reboot comes along with a rolling new app strategy that includes an unlimited free membership option (no credit card required) and cost tiers of $12.99 and $24 per month.

The content people will be able to access varies by level, and in some cases, legacy users will have less access by December when the grace period expires. Right now, people who pay $12.99 a month to use the Peloton app can take cycling lessons every day, but in December, they’ll only be able to take three lessons a month.

Replay includes a “Gym” function that allows users to take the Peloton app to the gym with them and create custom workouts.

Peloton is also saying goodbye to its signature red and black fire engine in favor of a new color combination that it says better captures the “energy” of the workout and the “afterglow” that comes. Brand new materials include shades of purple, pink, green, and bright red.

In a cool 90-second marketing video shared with CNBC, the Peloton app takes center stage. It shows people of all shapes, sizes, fitness abilities, and ages that they are used to taking strength and yoga classes at home, but also in gyms, which have long been seen as a threat to Peloton’s business.

While Peloton shows off its Bike, Tread, and Row machines in the clip, it doesn’t show the machines until about 30 seconds into the video.

This message is a far cry from Peloton’s previous commercials and marketing materials, which mostly featured ultra-fit athletes using its equipment.

″[We’re] “Now I’m first leaning towards the idea that, well, not everyone is going to bring home Peloton’s premium hardware,” Tom Cortez, Peloton co-founder and chief product officer, told CNBC in an interview. “Our members have a phone, we are on their phone, they take their phone where they want to go and if you want to put it [the Peloton app] On someone else’s equipment, that’s fine, and if you want to get it into someone else’s gym, great.”

Peloton has insisted that focusing on selling subscriptions doesn’t mean it’s giving up on its hardware business, and said the company is on a dual track with both. The new campaign is focusing on the app due to its lack of advertising and market research showing that only 4% of consumers know about it, the company said.

“When we first started coming out of Covid, and the press liked to be tough on Peloton, it was about ‘everyone get back in the gyms’ but we know our members were using our products in the gym,” said Jennifer Cotter, of Peloton. Chief Content Officer.

She noted that Peloton’s strength-training content, not cycling or running classes, is the No. 1 type of class for digital members and No. 2 among those with Peloton equipment. It shows how excited users are to consume Peloton content that has nothing to do with its hardware.

“When it comes to this initiative, we’re just excited that No. 1, our members will feel like a reversal and new members will feel like the peloton is for them,” Cotter said. “And then, you know, the tiered structure allows us to welcome people on the ramp.”

Brianna Desirou, 32, has been a member of the peloton since the early days of the pandemic. She said the brand’s competitive and ambitious appeal originally led her to buy a bike.

When briefed on the company’s new marketing strategy, she said she supports the move and its focus on being inclusive. But she said there was a chance making Peloton more affordable could dilute its brand.

“It’s like a club and now everyone’s in the club,” Desirou said.

Berland, Peloton’s new marketing chief, isn’t interested in the brand losing steam. She said the new marketing strategy reflects what the company really is.

“Our members, our coaches, our classes, our content. That hasn’t changed. The company has evolved in all of this,” Berland said. “It’s time for the brand and marketing to represent all of that and all of its vitality.”

Creating different entry points for the company’s content will set it up for long-term growth, said Liz Coddington, Peloton’s chief financial officer.

“What we’re doing is we’re opening up the overall steerable market for Peloton to people who might not have thought of us in the past because we didn’t really talk to them,” said Coddington.

“The real goal really is just to get more people into the Peloton ecosystem however they want to, and then help them on their journey of how we consume our content over time, whether that’s through the free option, through the lower tier or through Level up or eventually buy or lease our equipment.”

The company did not incorporate the potential upside of the app and marketing strategy into its financial outlook, and said some members of the paid app would likely downgrade to the free membership option.

In the past, she said, snap rates spiked briefly when the peloton changed prices, but quickly returned to typical levels.

“We’re optimistic about that,” Coddington said. “But it’s hard to know until we know.”

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