Peloton Cycles is a brand that was co-founded in 2013 by John Foley, and it aims at revolutionizing home fitness through the use of internet-of-things innovations that are used to provide fitness classes. The founders found a market gap after realizing that most people had fitness equipment in their homes that they never use due to lack of motivation or the lack of supervision. Foley noticed that what discourages people from home workouts is the tiresome trend of looking at a wall or just plainly gazing at the track. The solution to the training boredom was Peloton which is a bike that is integrated with sensors and 22” tablet computer that is connected to the internet. The tablet streams content from the training studios and hence the users can take live classes or request for sessions at their convenience at home (Levine, 2015). The ability of the brand to integrate fitness and internet-of-things experiences makes it possible for the bikes to become a home fitness phenomenon not only in the US but also globally.
The value proposition of the company towards a customer is solely based on the need for intense and fun home exercise that saves the user time and money. Previously, there has been other spinning studios that engage people in similar classes, but only if one is physically present in the studio. A spin studio is known to create an emotional experience for people as the riders can go through the intense workouts as they motivate one another and listen to music that the instructor plays. However, spinning studios may become expensive for those who do extreme workouts. For example, Soulcycle, one of the famous spin studio in the US charges $32 for every class which translates to $130 per month for people who work out once in a week. The practice is thus seen as being expensive considering also the time taken to drive to the studios, and the considerations made the basis for the development of the Peloton Cycles business model. By use of technology and the internet, Peloton reduced the cost of spinning and increased its accessibility without factoring out the motivation that comes with working out as a group in regular exercise classes. The initial purchase cost of the spin bike is $1,995, and afterward one only needs a monthly subscription of $39, and the buyer has unlimited rides to enjoy for him/her and the family (Frieswick, 2016). Peloton's position in the market is thus sufficient to enable it to operate globally.
As the membership of fitness studios is steadily increasing, Peloton was projected to have revenue of over $150million in 2016 which is triple what the brand made in 2015. The brand equity of the company can only go higher considering that it started making profits only 24 months after it sold its first automated bike. Foley projects that in the next five years, a million bikes will be sold, which is a forecast that cannot only be achieved in the US market and hence the need for globalization. If the brand goes global and can sell even a quarter of the projected figures, it would make $500million in sales of the bikes and $117 million upon charging of customer subscription. The numbers are impressive considering Foley started the business with only $350,000 from investors and 50,000 from his savings (Frieswick, 2016). Peloton operates through an effective combination of business and operating models. The company's primary assets are the fitness coaches, the studio, the tablet software, and the DJ's who together come up with the digital content that is produced for use on the Peloton Cycles. The enterprise thus enjoys recurrent revenue from the monthly subscriptions as compared to other companies that sell home exercise equipment. Unlike other spinning studios, Peloton is also able to gather information on user engagement and activity and apply it to improving future programming decisions. Peloton could thus easily be able to scale up from 30,000 users to 120,000 users and incur little additional costs mainly because the marginal cost that is incurred when the video content is distributed to the other user is low (Frieswick, 2016). The combination of operating and business models creates a potential rapid growth of the brand especially due to technological innovations like virtual reality and motion sensing.
To build a global brand, Peloton needs to make some considerations before expanding its market outside the US. The marketing team needs to identify if there are available markets in the desired areas. Just because Peloton is doing well in America does not guarantee its success in other regions. Different countries tend to have different ways in which people prefer to do their exercises. When creating Peloton into a global brand, the company should focus on glocalization so that the project is adaptable by the local realities (Wasserman, 2010). The market survey should also check whether the brand is wanted or required in a region as there are communities in other parts of the world that rarely exercise using bikes. The brand should thus be launched in the areas that are deemed to have great potential in sales.
After identifying the markets, the company should check if it can deliver supplies depending on the projected demand. Also, the brand may be willing to sell its bikes in a given region, but the laws of manufacturing and imports may limit the supply. Peloton should thus investigate the local legislation of the regions that it intends to venture and also check on their production capability to establish if it can support the market (Wasserman, 2010). Peloton can test its ability to deliver by checking the number of a country's spinning studios in operation and the average number of customers they enjoy.
As a form of glocalization, the company may also need to change the business name or products (Wasserman, 2010). In the case of Peloton, in its quest to expand globally, it may establish branches in regions that may view the way Americans wear in the gym as being inappropriate. The trend is most likely to be seen in Arab and Islamic countries that would not approve the wearing of shorts and tights for females even when working out. Peloton could thus be needed to change the software used on the Cycles sold in such regions so as to suit the different socio-cultural practices.
A brand is typically recognized by its logo, and it may need to be changed once a company is going global to avoid the use of words and symbols that could seem offensive in a foreign market. The research done on the logo should also check to ensure that the logo is not similar to that of any other brand operating in the region (Wasserman, 2010). For example, using the image of a woman exercising in shorts and a vest may not be appropriate for the Middle East market. However, Peloton can use an international or local firm to identify the cultural sensitivities of any region.
The brand packaging may also need to change in different regions depending on the requirements of the land (Wasserman, 2010). Different areas will also need instructions on how to use Peloton Cycles written in different languages that they can comprehend. Packaging requirements should thus be understood to ensure that product the transportation standards and contains the required regulatory information. To avoid cases of patent infringement, it is advisable for Peloton to register its trademark and also its website domain name. As a form of marketing the brand should use different country codes in their sites in contrast to using the standard “.com” extension. For example, if it launches in Brazil, the brand's website should have a “.br” extension.
It is important for Peloton to also look for local resources to help in understanding the new foreign markets. The brand may consider working with local distributors and retailers to speed up the process of understanding the international market (Wasserman, 2010). The home workout needs of people in Italy could be different from those of people in California or Saudi Arabia. After learning the business practices of a foreign region, Peloton then needs to create brand awareness in almost the same way as they did in the US. The growth of the brand in the US with just three years of operation shows its potential to prosper in the global market. Exercising is fundamental for the health of any individual, and hence Peloton is a brand that could be used worldwide in particular because of also the global adoption of technology.
Promotional Event (Essay 2)
To create global awareness of Peloton brand when unveiling it to the rest of the world, a promotional event is best suited. A promotional event is not only an avenue for customers to have fun but also an opportunity for the customers to bond with the brand and view it as being part of their lifestyle. The event is a market strategy that aims at growing the brand's profile and to create a connection with the product users. Most companies use a huge budget for preparing for such event; however, it is not the glamor of an event that resonates with the customers, but how remarkable and memorable the experience will be. Since the brand is doing a global launch for several countries at the same time, there may be the need for brand extensions to assist with the event (Levine, 2015). The brand extensions should be companies in the same field as Peloton; preferably Google and Reebok. Google is an internet service provider, and Reebok manufactures sporting merchandise. The three brands thus complement each other and would be suited to work together in achieving the global success of the Peloton international launch event. The event will be held in the UK as it has the potential of having the same brand success, just like the US. People in other nations will view the event online through live streaming on the Peloton website, and they can interact through chat rooms provided on the same platform.
When creating an event plan, it is imperative to consider the 5Ws of planning for it to be successful (Jago, et.al, 2003). The first “W” is “Why should the event happen?” Various brands are launched on a daily basis around the world but what separates a brand from the others is how memorable it is the first time a customer heard of it. The best way to create a lasting impression on the bike users is an event that is unique enough not to be forgotten. A successful promotional event could almost certainly guarantee the success of a product in the target regions. Spinning cycles are not products that people use on a regular basis particularly in the developing nations and hence the need for an event that will not only entertain, but also educate the masses on the brand.
The second W is “What?” The event planner should clearly identify the nature of the event so as not to overlook that it is still a marketing strategy. The aim is to create a bond between the new foreign market and Peloton as a brand. “When” is the fourth W and the question aims at ensuring that the event is planned at the most appropriate time when the product is readily available in all of the target global markets (Jago, et.al, 2003). For Peloton, the event should be done after research in the world markets is done and the products already available in the local stores or through their website. If the event is done before stocking of the product in the international stores, it will not have the desired result as most consumers prefer to make the purchases immediately after the event. The event organizers should also determine “Who” is involved in planning, funding, attending, or knowing about the event (Jago, et.al, 2003). For Peloton, the event will be organized by its marketing department with the help of some external planners to assist in the music concert. Funding will be done by the Peloton Company with the help of its brand extensions; Google and Reebok. Attendance will be by any willing participant from the UK, and those from other nations can stream it online.
An event also has to undergo several phases in its lifecycle with the first one being the concept stage (Jago, et.al, 2003). The scope of the event will include a huge concert in a major stadium in London. The show will involve musical artists from around the target regions, and it will also have a section with hundreds of Peloton Cycles with standby trainers, and people can ask questions about the product and even try riding the bikes. The stakeholders are Peloton, Google, and Reebok and the event management team will be a selection of the brand's marketing team with the help of an external renowned event organizer.
The second stage is event coordination which will be the key determinant of the level of success of the event mainly because of the time difference in different regions. A suitable coordination methodology would be one that ensures that the event extends to a time where at least all the target markets can participate during the daytime (Jago, et.al, 2003). The event entrance will be free since it is aimed at brand awareness and customer interaction and hence no need for ticketing. People streaming the event online will also access the websites for free. Again, the coordination should be done through a collaborative effort between Peloton's management team and the outsourced event managers.
Controlling is the third stage of a successful branding event. The phase is necessary because it will control the budget made for the event and also resolve any conflicts that may arise (Jago, et.al, 2003). The budgetary control committee should be compromised of representatives from all the three stakeholders for accountability purposes. The marketing team should also manage the relationship between the customers and the sales team on the ground to avoid conflicts.
For an event like that of the Peloton global launch, the culmination stage is necessary particularly because it's a free event and there is a likelihood of a very high turn up. The event organizers should work in close collaboration with security agencies to ensure there are no unexpected instances. Safety is a primary consideration for people when attending such events and a breach in security could tarnish a brand image. All the teams involved in the event should coordinate accordingly through proper communication to avoid any mishaps.
Closeout is the final phase of the event, and it should give a detailed report of what the event was able to achieve and also what could be improved to increase customer satisfaction. The project should also be handed over to the necessary authorities (Jago, et.al, 2003).
Peloton Cycles is a brand that has only been in the American market for three years, but it's already making remarkable revenues and has revolutionized home work out. There is hence a need for the brand to be built globally to satisfy the market needs of people from other regions around the world.
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