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Alejandra Carrillo Cortina

Peloton’s Case Study

As a former unicorn, Peloton is now facing a very different business environment than the one in
which its original business model thrived on. The SARS COVID Pandemic potentialized at home
fitness gadgets, apps, memberships or in Peloton’s case all of the above. Luckily, the pandemic
eventually slowed down and we regained a sense of normality; students were back at school, workers
arrived at the office and people went back to their regular fitness activities. For Peloton this meant a
huge decrease in sales, gross margins dropped at fast passes and with an ever changing business
environment it is very hard to identify the best solution for Pelotons officials. In the following essay
we will look into the micro and macro business environment surrounding Peloton and we will conduct
a SWOT analysis taking special consideration in the opportunities and threats presented to Peloton.
Furthermore, using PESTLE’s framework analysis we will identify the main issues and threats for at
home fitness companies like Peloton and propose ways to address them. Moreover we will go
through one of Peloton’s most important stakeholders; its customer. Looking at the current customers
and looking out for potential new customers. Finally, we will analyse the possible outcome of
engaging new markets such as South America and Asia.

Business Environment

Business Environment is a concept that has been defined by several authors; according to
Keith Davis “Business environment is the aggregate of all conditions, events and influences that
surround and affect it.”Another definition is presented by Reinecke and Schoell “The
environmental of business consists of all those external things to which it is exposed and by
influence directly or indirectly.” Definitions may vary but they all agree that in a business
environment you will encounter external factors or influences that will affect your company whether
it is directly or indirectly. There is also a distinction between micro or macro business environments,
in which the conditions are classified in how tailored to the company are. For example losing a big
cobalt supplier might affect some industries but imposing tariffs on goods from a whole country will
affect the whole business environment. Some other authors also divide the business environment into
external and internal factors. This is especially useful when it comes to identifying weaknesses or
threats for your company. To summarize further all of the components of Business Environment, the
following figure inspired by the Indian Institute of Materials Management report will display all of
them:

Now that the Business Environment components have been established we will use this framework to
analyse Pelotons’ Micro, Macro, External and Internal Environment. For the information provided in
the case study we can presume Peloton is a company based in the USA, which is going through a
turbulent political era not only within its borders but also in regards to multinational cooperation. As
tariffs continue to be imposed and removed every other week the suppliers cannot fix on prices and
customers are feeling unsure of buying American goods nowadays. In regards to the fitness and
wellbeing industry, society has shown more interest in the status of wellbeing practices rather than
healthy habits itself. The pilates princess and clean girl aesthetic has transformed fitness into a way
to perform wealth. Finally one of the most important elements that have affected Peloton’s
performance is the Socio Cultural shift from pandemic fitness at home to a back to normal gym
membership. For companies such as Peloton or Netflix the end of lockdown meant a big loss of
customers, people now being able to participate in outdoor activities were not as keen on spending
the afternoon inside their homes.
Strength, Weaknesses, Opportunities and Threats (SWOT) Analysis

Strength Weaknesses

-​ Relevant presence in social media. -​ One product based company

-​ High-end technology. -​ Not really affordable for a big
-​ Brand awareness. part of the population.
-​ Loyal customers. -​ Public relations department

Opportunities Threats

-​ Presence in five countries. -​ A lot of competition is rising in the

-​ Rental business model. well being industry.
-​ Leadership changes. -​ Changes in customer behaviour
-​ Access to digital content and app -​ Declining wages or economic
membership included with the recession in the USA.
bike.

PESTLE Model Analysis

The PESTLE model is named after the acronym of six categories that take place in this
analysis; Political, Economic, Socio-cultural, Technological, Legal and Environmental. The porpouse
of this analysis is for the owner of a business to be able to easily identify opportunities and threats of
the market or industry. In Peloton’s case two of the categories stand out the most ;

-​ Economical Factors

Within the company the gross income has been decreasing steadily since 2020 when Peloton’s value
doubled in just one year, over the course of five years the brand lost $815 million. This is not an
isolated event, most of the at home boom companies from the pandemic lost a ton of money after the
pandemic ended. Moreover the Global Econmy has been at its weakest since 2008, it is estimated that
showing that the least privileged 80% of Americans have less cash on hand than prior to the
pandemic.

-​ Political Factors

Under the IEEPA Act tariffs have been imposed on most countries arround the world making overall
imports rise in 19.5 percent affecting all 15% of US goods imports. Based on 2024 import values, the
tariffs will affect more than $500 billion of imported goods and may have an effect on the components
of Peloton’s bikes, raising already high prices to a higher level.
 -​ Technological

Since 2012 technology has rapidly evolved, there are more technological advances now than ever
before making tech a very competitive industry. Eventhough Peloton’s bike is not directly a
technological gadget, part of its success is tied to development regarding screens and other tech
features. The use of IA and fast tech manufacturers have made it even more competitive, as lower
prices are disrupting the market.

Peloton’s Costumer

Peloton was first positioned as a high-end luxury brand, the target audience was wealthy
urban professionals with tight schedules but enthusiastic about fitness and wellbeing. As explained
before the pandemic highly impacted Peloton, as gyms were closed and outdoor activities banned a
large part of the population began to seek fitness alternatives at [Link] targeted audience shifted
to fit more customers but now that the pandemic is over a lot of its previous buyers are going back to
their local gyms. In my point of view it is time for Peloton to take a closer look into its customer
persona becuase a one product fits all approach is no longer working. Going through Peloton’s
social media accounts as well as their website we can quickly take a grasp of their marketing
strategy, which is based on a gross margin of the population rather than niche marketing. At first
glance it might seem obvious that a company should try for its product to be wanted by all kinds of
people but in reality customers prefere to have a tailored like experience that fits their profile. In
regard to the fitness industry, this has become more and more evident. The tennis club you take part
in, the pilates studio you enroll to or the indoor cycling membership is not only about taking care of
your well being anymore it is also an identity reaffirming activity. As Peloton’s is trying to expand
its customer base the company should consider marketing not only a product but an identity.
Deciding wheter the bikes are made to fit female or male standards in fitness may be a good starting
point. For most men fitness apps or equipment performance is the most important but for women
aesthetics will also be considered. When it comes to marketing strategies, men based experience has
to make them feel powerful and challenged whereas women will prioritize feeling comfortable,
desirable and thought of in regards to design. As Peloton moves forward into its existing markets a
conscious strategy must guide their decision making process, fitness as an industry has diversified
greatly so it is no longer an option to try to sella gross fraction of customers.

Peloton’s market expansion

Eventhough Peloton has a strong brand awareness, as for right now its products are only available in
five countries which are US, Canada, Australia, UK and recently Germany. In troublesome times it
might seem risky to open uo your market and scale operations further but there is a great
opportunity lost staying within borders. If I were a marketing manager at Peloton I would suggest
making a soft launch in latinamerican countries using Peloton’s app to penetrate the market. Due to
architectural and urban differences cities in Latin American countries are usually very denssly
populated making traffic a huge problem for working people. Even if remote jobs are becoming more
common, a large part of the working population in Latin America spend roughly 2 or 3 hours stuck in
traffic or getting to their jobs, making it very hard for them to be willing to spend some time at the
gym. This is a huge opportunity for Peloton’s advisers to look into, at home fitness alternatives might
not be as desirable as they were a few years back but in a Latin American context it is still an
eye-catching investment. Promoting and selling the app might be a soft launch low risk alternative for
Peloton. To put into a timeframe the company could spend six months penetrating the market with a
soft launch through the app, this alternative launch will be significantly less expensive than selling
the bikes directly. After a six month soft launch trial will have a reliable overview of Latin America’s
fitness market and could decide one at most two of the most promising countries. After this six month
trial, the project manager will have to come up with a decision wheter it's better for the company to
reach out for Latin America’s market or if it is not really a risk worth taking. This could be a cheaper
and less risky way to test the market before making a hard launch and regretting it. In the following
figure the phases of this new market penetration will be shown :

References

Alanzi, Salem. Pestle Analysis. University of Salford. September 2018.

 Indian Institute of Materials Management, Business Environment. Introduction to Business
Environment and Components. 2019 New Delhi.

Thompson, Moxie. The US Economy is Headed for Recession. Bologna Institute for Policy
Research. John Hopkins School of Advanced International Studies. 2025 Italy.

York, Eric and Durante, Alex. Trump Tariff : Tracking the Economic Impact of the Trump
Trade War. Washington August 15, 2025
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