Assignment Questions
1. Analyze Peloton’s pricing strategy and evaluate its effectiveness in combating inflation.
2. Discuss the application of Kallet’s critical thinking framework in solving Peloton’s
challenges.
3. Evaluate the role of VUCA (volatility, uncertainty, complexity, and ambiguity) in shaping
Peloton’s decisions.
4. Propose alternative business strategies Peloton could adopt to regain market
competitiveness.
5. Reflect on how pandemic-driven market changes have influenced consumer behavior in
the fitness industry.
Capella University
MBA-FPX5002 MBA Leadership
Peloton's Strategy to Boost Sales During Inflation
In 2020, more people started working out at home because of the Covid-19 pandemic.
Peloton, a top home fitness equipment provider, sold a lot more during the peak of the
pandemic. But as the pandemic's effects lessened, demand for home exercise equipment,
including Peloton's products, decreased because people became more sensitive to prices
and faced more competition
(Forman, 2022b). Also, the whole industry is having a hard time because inflation is
increasing prices, making it tough for companies like Peloton to keep selling as costs for
equipment rise. This, coupled with several lawsuits regarding product safety and insider
training, makes products less likely to sell as consumers become wary of purchasing items
or subscriptions that might not be supported soon (Leonard, 2024).
This paper will take a closer look at Peloton's specific problems and come up with a clear
solution using Kallet’s critical thinking framework from the book "Think Smarter" (Kallet,
2014). The paper also wants to study how VUCA (volatility, uncertainty, complexity, and
ambiguity) could affect the solution, using Bennett et al.'s work (2014). The aim is to use a
similar
framework to how Panera resolved its mosh pit issues by customizing the consumer
experience using Kallet’s critical thinking framework and VUCA to effectively solve the
unique problems Peloton is facing (Jargon, 2017).
Problem
During the pandemic, many people bought home exercise equipment as gyms closed.
Peloton, known for its stationary bike, treadmill, and content membership, saw a surge in
, demand despite its high prices. However, the company's stock price dropped by more than
77% since last year due to misjudging the market influenced by the pandemic.
The new CEO, Barry McCarthy, is working to boost sales and make changes to address
challenges from the fluctuating market and price increases on its products. The Peloton bike
and
09:19:23 GMT -05:00
treadmill cost around $3,000 each, not including accessories or delivery. Additionally,
there's a
$39-per-month all-access content membership, and financing the bike through Affirm adds
about
$44.74 per month, bringing the total cost to roughly $84 per month for the membership and
equipment.
Inflation and supply chain challenges have led to increasing prices across various sectors.
Peloton plans to implement a significant price increase of around 17% for its original bike
starting from January 31, after reducing the bike's price by about 20% last August (Forman,
2022b). This fluctuating pricing trend highlights the urgent need for more stable sales and a
viable solution.
According to YipitData's findings, Peloton saw an 82% decline in gross orders for its
original bike in the week ending Feb. 27 compared to the corresponding week last year
(Forman,
2022). This significant drop in sales poses a major challenge to the company's long-term
sustainability and emphasizes the need for strategic adjustments to navigate the changing
market dynamics.
Thinking Critically
The Peloton leadership has proposed the "One Peloton Club" program to boost sales. This
program will be available in limited locations across several states. Customers will pay a
monthly subscription fee of $60 to $100 for the bike. Unlike current programs, customers
can cancel the subscription and return the bike without any cancellation fees. While this
solution can potentially increase demand, it may also pose challenges.
In the book "Think Smarter," Kallet outlines a critical thinking framework as a three-step
process crucial for understanding and resolving any business problem. The first step is
clarity, which involves identifying the problem and defining broad goals such as improving
sales. Forman's article highlights that the "One Peloton Club" aims to take advantage of
Peloton's historically low churn rate while expanding the addressable market to reignite
slowing growth
1. Analyze Peloton’s pricing strategy and evaluate its effectiveness in combating inflation.
2. Discuss the application of Kallet’s critical thinking framework in solving Peloton’s
challenges.
3. Evaluate the role of VUCA (volatility, uncertainty, complexity, and ambiguity) in shaping
Peloton’s decisions.
4. Propose alternative business strategies Peloton could adopt to regain market
competitiveness.
5. Reflect on how pandemic-driven market changes have influenced consumer behavior in
the fitness industry.
Capella University
MBA-FPX5002 MBA Leadership
Peloton's Strategy to Boost Sales During Inflation
In 2020, more people started working out at home because of the Covid-19 pandemic.
Peloton, a top home fitness equipment provider, sold a lot more during the peak of the
pandemic. But as the pandemic's effects lessened, demand for home exercise equipment,
including Peloton's products, decreased because people became more sensitive to prices
and faced more competition
(Forman, 2022b). Also, the whole industry is having a hard time because inflation is
increasing prices, making it tough for companies like Peloton to keep selling as costs for
equipment rise. This, coupled with several lawsuits regarding product safety and insider
training, makes products less likely to sell as consumers become wary of purchasing items
or subscriptions that might not be supported soon (Leonard, 2024).
This paper will take a closer look at Peloton's specific problems and come up with a clear
solution using Kallet’s critical thinking framework from the book "Think Smarter" (Kallet,
2014). The paper also wants to study how VUCA (volatility, uncertainty, complexity, and
ambiguity) could affect the solution, using Bennett et al.'s work (2014). The aim is to use a
similar
framework to how Panera resolved its mosh pit issues by customizing the consumer
experience using Kallet’s critical thinking framework and VUCA to effectively solve the
unique problems Peloton is facing (Jargon, 2017).
Problem
During the pandemic, many people bought home exercise equipment as gyms closed.
Peloton, known for its stationary bike, treadmill, and content membership, saw a surge in
, demand despite its high prices. However, the company's stock price dropped by more than
77% since last year due to misjudging the market influenced by the pandemic.
The new CEO, Barry McCarthy, is working to boost sales and make changes to address
challenges from the fluctuating market and price increases on its products. The Peloton bike
and
09:19:23 GMT -05:00
treadmill cost around $3,000 each, not including accessories or delivery. Additionally,
there's a
$39-per-month all-access content membership, and financing the bike through Affirm adds
about
$44.74 per month, bringing the total cost to roughly $84 per month for the membership and
equipment.
Inflation and supply chain challenges have led to increasing prices across various sectors.
Peloton plans to implement a significant price increase of around 17% for its original bike
starting from January 31, after reducing the bike's price by about 20% last August (Forman,
2022b). This fluctuating pricing trend highlights the urgent need for more stable sales and a
viable solution.
According to YipitData's findings, Peloton saw an 82% decline in gross orders for its
original bike in the week ending Feb. 27 compared to the corresponding week last year
(Forman,
2022). This significant drop in sales poses a major challenge to the company's long-term
sustainability and emphasizes the need for strategic adjustments to navigate the changing
market dynamics.
Thinking Critically
The Peloton leadership has proposed the "One Peloton Club" program to boost sales. This
program will be available in limited locations across several states. Customers will pay a
monthly subscription fee of $60 to $100 for the bike. Unlike current programs, customers
can cancel the subscription and return the bike without any cancellation fees. While this
solution can potentially increase demand, it may also pose challenges.
In the book "Think Smarter," Kallet outlines a critical thinking framework as a three-step
process crucial for understanding and resolving any business problem. The first step is
clarity, which involves identifying the problem and defining broad goals such as improving
sales. Forman's article highlights that the "One Peloton Club" aims to take advantage of
Peloton's historically low churn rate while expanding the addressable market to reignite
slowing growth
