The fitness company Peloton was one of the big winners during the pandemic when many exercisers had to find new workout alternatives as gyms and fitness centers closed. The network effect means that the quality of a website, platform, or product/service improves substantially as more users take advantage of the offerings – e.g., Amazon’s book reviews get way better when more buyers read and post about newly released books.
There were other fundamental and lasting reasons that Peloton has seen great success. Students could engage in a discussion on this mini-case by first reflecting on what factors they and other amateur athletes consider priorities for a good workout experience. Guiding the discussion towards the social aspects of modern fitness will support the key focus of this business challenge. Other points of discussion could be the challenges busy exercisers face, such as finding time (including travel to a fitness center), keeping motivated, and coordinating with other fellow exercisers. In evaluating the Peloton approach, students could be asked to compare the pros and cons of the Peloton approach compared to more traditional in-person fitness activities. Discussion could follow with suggested marketing messages to enhance the pros and mitigate the cons.
> A. Discussion Questions [In your own words, answer in-depth 2 of 3 questions].
1. What other products or services benefit from the “network effect?” What strategies can companies pursue to more effectively exploit this phenomenon?
2. SoulCycle was the early leader in studio spinning classes and has now entered the at-home fitness market. Review the websites for both SoulCycle and Peloton. What strategic factors might have contributed to Peloton’s greater success?
Comparing the two websites (onepeloton.com and soulcycle.com).
A comparison of the equipment offered by the two companies can be found at:
https://www.bicycling.com/news/a31403330/soulcycle-at-home-bike-peloton-comparison/Links to an external site.
https://www.gq.com/story/we-tried-soulcycles-new-at-home-bikeLinks to an external site.
3. Peloton has a reputation of being a product for rich people. Beyond lowering their prices, what strategies could Peloton employ to broaden their appeal?