Finding Your Brand’s Niche

An easy explanation for how Peloton was able to identify its powerful niche audience is to attribute it to the brand’s price point—only a tiny segment of consumers can afford Peloton’s products, so voilà, there is your audience.

The story of Peloton’s success is not that simple. There are many stationary bike and treadmill brands with similarly priced products that also include subscription-based virtual classes—Echelon and NordicTrack, for example. However, neither of those competitors had the killer audience insight that stoked Peloton’s growth—their audience isn’t the broad audience of “the wealthy,” it’s women who want the ability to reproduce boutique SoulCycle-style classes in their own homes.

The lesson here is as much about brand positioning as it is about audience identification. To identify a niche audience, brands need to look first for an unmet need, even if that need, or the audience seeking it, seems too narrow to sustain a business. Look at YETI—would anyone have guessed that there was an audience of consumers who wanted but could not find professional-grade coolers like the ones used by marlin guides in Key West instead of just the usual $30 plastic cooler from Coleman or Igloo?

The same principle holds true for Peloton—they identified a narrow audience with an unmet need, and then they created a product to fill the gap.

How to Get a Niche Audience to Pay Niche Audience Prices

In order for a niche brand to succeed, it will almost inevitably need to convince its niche audience to pay a premium for a product they can’t get anywhere else.

One approach is to tell an overall savings story. In an interview with Forbes, Peloton CEO Carolyn Tisch Blodgett explains how they do it: “We often hear that Peloton is a big purchase, which it absolutely is. What we’re trying to do is to show the value story in a couple of ways. One is getting that math in front of people, so they can see that you are actually saving money by buying a Peloton bike.”

Blodgett estimates that cycling class fanatics will spend upward of $6,000 per year on in-person classes, so in terms of the math, the equation does check out. This approach also works for raw selvedge denim brands such as Naked & Famous: sure, $200 seems like a lot to pay for jeans, but a good pair of raw Japanese denim will last years, as opposed to a cheap mall brand that will fall apart in months.

Another story that Peloton tells to help its audience stomach the price tag is an upgrade story: a session on your Peloton isn’t just a replacement for taking a SoulCycle class—it’s even better. Instead of wasting time traveling to and from your class, you can walk a few steps to your basement. Instead of dealing with the headache of wait lists or odd class times, you can take a Peloton class whenever you want, either via livestream or on demand.

Niche brands often use an upgrade story to justify their high price points, and it’s an effective approach. Just look at how much mileage off-road SUV brands such as Toyota and Jeep get from high-priced models that include rock rails and cat-back exhaust. While features like these may seem completely unnecessary to most consumers, they are the exact kind of features that make these two brands the cornerstones of the off-roading community, and members of that audience are willing to pay top dollar for the upgrade.

How to Market to a Niche Audience

Peloton’s story, as Carolyn Tisch Blodgett tells it, is all about “helping people be the best version of themselves.”

It’s an inspirational and aspirational story, but how the brand gets that story in front of its niche audience is the real challenge. One of Peloton’s answers to that challenge is influencers. Niche audiences are particularly receptive to influencers because small, passion-based communities are usually organized around a specific set of values, and they look up to people who are paragons of those virtues.

However, Peloton doesn’t rely on celebrity influencers like many other luxury brands. Instead, Peloton leverages its own instructors, such as Ally Love, Alex Toussaint, and Matt Wilpers, all of whom have gained more than a hundred thousand followers on Instagram. And Peloton doesn’t view its instructors as mere product pushers—according to John Foley, one of the company’s founders, the brand thinks of its influencer content as “a television streaming facility filming fitness content.”

Content is the key word here—niche brands need to engage their niche consumers with influencer-driven content. Content helps sustain niche communities; it also provides the audience common ground on which to build large online followings, such as the Official Peloton Mom Group and the Working Moms of Peloton.

B.J. Fogg, a behavioral scientist at Stanford, describes the effect this way: “Peloton creates a social group that is virtual, connecting people across the world. That’s where a lot of the magic happens.”