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Peloton And Other Luxury Brands Target Cost-Conscious Consumers With Lower-Priced Items

September 24, 2020 Sarah Cavill

Many luxury brands have recently launched less-expensive offerings of their products, often done to expand the reach of brands, create broader awareness and engagement and scale revenues. In the case of a brand like Peloton, which recently introduced lower prices and new products, expanding the product line with lower-priced items can be a way to meet the demands of newly interested consumers. For other brands, particularly in fashion, lower-priced items are often marketed and promoted separately from high-end labels, introducing the luxury brands to net-new audiences. When balancing multiple products across a range of price points, brands need to be conscious of maintaining brand integrity. Relevant messaging with effective targeting becomes essential for brands looking to expand their customer bases without losing their luxury cache. 

Peloton Capitalizes On Consumers Working Out At Home By Introducing New Lower-Priced Products

Peloton is a notoriously expensive exercise brand that specializes in top-end hardware, including its famous stationary bike and, added in 2018, a treadmill. Both Peloton exercise equipment products feature large screens on which users interact with instructors and follow chosen exercise routines. This unique mix of a fun social media-like environment and exercise class has made the brand wildly popular. Peloton’s stock surged 178% this year, while gyms were closed during the pandemic and consumers turned to exercising at home. 

Leveraging their popularity, and the opportunity to offer more products across a broader spectrum of consumers, Peloton introduced a lower-priced treadmill called the Tread and gave their higher-priced treadmill the name Tread+. The new, lower-priced Peloton Tread will have a smaller platform and a traditional running belt, more like other treadmills on the market. The price is also $1800 less than the original Peloton treadmill. At the same time, Peloton lowered the price of its original bike and introduced the more expensive Peloton Bike+, with the added enhancement of a larger screen that can rotate 360 degrees. In addition to its hardware, Peloton offers on-demand and live-streamed fitness classes through its digital membership, and the moveable screen on the Bike+ is marketed as making it easier to move from spinning to yoga.

When introducing a new lower-priced product, brands must consider if there is a market for the product and whether or not the lower-priced product will impact the luxury image of the brand. In the case of Peloton, the jump in interest from people wanting to exercise at home made introducing the Tread a smart move. The concurrent introduction of the Peloton Bike+, allowed the brand to stay true to their original brand identity by simultaneously promoting a newer, more exclusive product.

Designers Deploy Strategic Partnerships To Introduce Less Expensive Fashion Lines

Lower-priced fashion lines, often called bridge or diffusion lines, were a popular way for fashion houses to “leverage the reputation of their respective mainlines to attract a following of their own” according to Rocky Li at Grailed, a menswear marketplace. However, the rise of copycat fast fashion and the increased interest in streetwear, led to the demise of a lot of high-end diffusion lines. 

Many designers read the writing on the wall and entered into strategic partnerships, or limited time co-branded “drops,” with popular mall brands. “The most clear cut example [of co-branded drops] is H&M. Its pioneering high-profile designer collaborations, including Comme des Garçons in 2008 and Maison Martin Margiela in 2012, proved designer fashion was available at a price point even lower than diffusion could offer. These releases were a game changer for fast fashion, and H&M’s competitors took notice and followed suit,” noted Li. Recent co-branded drops included Missoni x Adidas, Dior x Nike and Sandra Mansour with perennial collaborator H&M. Streetwear represents the authenticity that many consumers crave, so when fashion brands create products for the influential streetwear consumer group, instead of diluting the brand, the lower-priced items generate hype and excitement. By effectively using strategic partnerships, fashion brands are able to connect with different audiences across products lines.

For luxury brands that want to offer a broader product line, including lower-priced products, understanding the market forces, consumer perceptions and possible targeting opportunities should inform marketing strategies and promotions. Many luxury brands will be able to leverage their cache, popularity and reputation while expanding into lower price points. But luxury brands considering expansion should be conscious of appealing to different shoppers with a mix of highly targeted multichannel strategies.

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About the Author

Sarah Cavill

With more than 20 years of writing, editing and reporting experience, Sarah Cavill brings to Digital Media Solutions (DMS) a fine-tuned and diverse set of skills. Her work has been featured in notable publications including The Daily Muse, CBS Local, Techlicious and Glamour magazine. Sarah has a passion for current events and the deep-dive research that goes into the content development and brand identity of DMS Insights. In her role as Senior Marketing Communications Writer, Sarah contributes to the pitching, researching and writing of multiple stories published each week surrounding digital and performance marketing innovations in pop culture, news, social media, branding and advertising.

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