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    The Fashion Channel - Case Study

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    Foshan E-Mart
    Dana Wheeler is presenting recommendations for TFC's new segmentation and positioning strategy to strengthen its competitive position against growing competition from other networks adding fashion programs. The options are: 1) maintain a broad approach, 2) focus on a single high-income segment, or 3) focus on two segments. While option 2 may get the highest CPM from advertisers, it is too risky and narrow. Option 1 does not improve their position. Option 3 is projected to increase revenues over 50% and profit margins 39%, making it the best long-term strategic choice despite slightly higher costs.

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    The Fashion Channel - Case Study

    Uploaded by

    Foshan E-Mart
    170 views12 pages
    Dana Wheeler is presenting recommendations for TFC's new segmentation and positioning strategy to strengthen its competitive position against growing competition from other networks adding fashion programs. The options are: 1) maintain a broad approach, 2) focus on a single high-income segment, or 3) focus on two segments. While option 2 may get the highest CPM from advertisers, it is too risky and narrow. Option 1 does not improve their position. Option 3 is projected to increase revenues over 50% and profit margins 39%, making it the best long-term strategic choice despite slightly higher costs.

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    Presentation on The Fashion Channel Case Studies with details strategies.

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    Dana Wheeler is presenting recommendations for TFC's new segmentation and positioning strategy to strengthen its competitive position against growing competition from other networks adding fashion programs. The options are: 1) maintain a broad approach, 2) focus on a single high-income segment, or 3) focus on two segments. While option 2 may get the highest CPM from advertisers, it is too risky and narrow. Option 1 does not improve their position. Option 3 is projected to increase revenues over 50% and profit margins 39%, making it the best long-term strategic choice despite slightly higher costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    170 views12 pages

    The Fashion Channel - Case Study

    Uploaded by

    Foshan E-Mart
    Dana Wheeler is presenting recommendations for TFC's new segmentation and positioning strategy to strengthen its competitive position against growing competition from other networks adding fashion programs. The options are: 1) maintain a broad approach, 2) focus on a single high-income segment, or 3) focus on two segments. While option 2 may get the highest CPM from advertisers, it is too risky and narrow. Option 1 does not improve their position. Option 3 is projected to increase revenues over 50% and profit margins 39%, making it the best long-term strategic choice despite slightly higher costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    Case Scenario

    Dana Wheeler - Senior Vice President Of The


    Fashion Channel (TFC)
    Recommendations for TFC's new segmentation
    and positioning strategy
    Strengthen Competitive Position
    Rethink approach to marketing
    Presenting to CEO Jared Thomas at senior
    management meeting
    Prepare analysis and propose strategy

    Background
    Only

    successful cable TV network dedicated solely to


    fashion 24 X 7
    Constant revenue and profit growth above industry
    average since beginning in 1996.
    Revenues for 2006 forecast at $310.6 million.
    Most widely available niche networks reaching out to
    80 million households.
    Mostly viewed by women between 35 and 54 years of age
    according to annual demographic survey.
    Theme for marketing programs - Fashion for Everyone
    concept of mass marketing.
    Realized competition from other networks adding fashion
    programs in their line-ups, which prompted management to
    hire an experienced marketer.

    TFC ADVERTISING Revenue Model


    Average

    present rating of 1.0, which meant


    average 1% household out of 110 million US
    households watch Fashion Channel at any
    point of time.
    Revenue from advertising $230.6 million out
    of $20 billion that all US consumer
    advertisers spend cumulatively on TV
    advertising.

    TFC CABLE AFFILIATE FEES


    Cable

    affiliate fees was $80 million targeted


    for 2006.
    Negotiated subscriber fee was averaged at
    $1.00 per cable network subscriber on the
    basis of carriage, which was at the lower end
    of the industry range.

    Competition

    Lifetime and CNN started hosting fashion programs targeting


    young women and men respectively, both capable of being sold at
    premium CPM (Cost per thousand).

    Personal telephonic survey of 800 households yielded the


    following ratings (in a scale of 5):

    Consumer interest in viewing


    TFC 3.8
    Lifetime 4.5
    CNN 4.3

    Awareness
    TFC 4.1
    Lifetime 4.5
    CNN 4.6

    Perceived value
    TFC 3.7
    Lifetime 4.4
    CNN 4.1

    ATTITUDINAL RESEARCH
    FINDINGS
    GFE

    Associates conducted research with 100


    questions on a panel of consumers about
    their attitudes towards fashion and TFC.
    Used sophisticated statistical correlation
    program to analyze answers.
    Reports suggested 4 unique groups
    Fashionistas, Planners and Shoppers,
    Situationalists, and Basics.
    Most of the males in the Basics group.
    Women were distributed in all groups.

    Strategy Option I: Broad multi


    Segment Approach
    Pros

    Cons

    Reduced risk as
    approach is consistent
    with company mission
    (Fashion for everyone)
    and past strategic
    approaches
    No additional
    programming costs
    1.0 to 1.2 increase in
    ratings
    Less expected internal
    and external reluctance
    due to minimal changes

    10% drop in CPM to 1.8


    Continued loss of
    market share due to
    strong competition
    Loss of advertising
    revenues
    No strategic
    improvement or
    development, lack of
    focus

    Strategy Option II: Focused one Segment


    Approach

    Pros

    Cons

    Strengthen the value


    of audience to
    advertisers as it appeals
    to a specific segment
    (Income > 100K)
    Increased CPM up to $
    3.50
    High focus, unique
    niche strategy

    Most competitive
    segment
    Risk to lose loyal
    audience
    Smallest cluster, less
    audience
    Additional
    programming costs of $
    15 Million
    Drop in rating from 1.0
    to 0.8
    Lack of strategycompany fit (fashion for
    everyone)

    Strategy Option III: Two segment


    Strategic Approach
    Pros
    Increase in rating from
    1.0 to 1.2
    Growth in CPM to $
    2.50
    Low Risk as focus is
    not as narrow as in
    strategy option 2
    Companys past
    mission is still feasible
    to retain, i.e. fashion for
    everyone

    Cons
    Higher programming
    expenses of additional
    $20 Million

    Quantitative Analysis of three


    Strategy Options

    According to the Ad Revenue


    Calculations
    Strategy

    Option 3 offers the highest revenue


    prospects per year. In case this strategy is
    selected, revenues are expected to increase by
    more than 50% in comparison to the current year.
    Though Expenses for Strategy Option 3 are the
    highest (Exhibit 5) it offers the highest profit
    margin (39%) too.
    The expected net income when choosing Strategy
    Option 3 is 80% higher as in the year 2006 and
    77.9 % higher as in Strategy Option 1.
    Strategy Option 2 is expected to be almost as
    successful as Strategy Option 3 with a profit
    margin of 37%.

    Decision Making Conclusion


    Strategy

    Option 1 is not viable as this option not only offers


    the least net income & revenue, it is disadvantageous as the
    company would lose audience, awareness and reputation to its
    main competitors.
    Strategy Option 2, although, offers a higher CPM and its profit
    margin is only marginally less than in Strategy Option 3, the
    concept is entirely too risky. While advertisers might favour
    this narrow target market, supervisors and the broad audience
    would be hard to convince as it alters the current concept
    completely.
    Strategy Option 3 seems to be the most fitting long-term
    strategic option Dana can suggest to her supervisors. Although
    this strategy does not offer the highest CPM, it generates the
    highest profit margin and net income. Strategy Option 3 is not
    a drastic change to the current strategy and hence less
    resistance is expected from supervisors and target audience.

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