The Fashion Channel (Case Study)

Case Facts

› TFC - Only network dedicated to fashion.

› Revenues forecasted to be 310.6 millions USD (2006).

› Market reach of 80 million US households.

› TFC grew with the strategy of mass marketing till date.

› Most avid viewers: women aged 35-54 years

 

Case Facts (contd.)

› Competition from fashion programming by Lifetime and CNN.

 

› Dana Wheeler recruited to build on the momentum and to stave off the competition.

› Main sources of revenue are advertising sales and cable

 

 

Problem Statement

› Select the best possible segmentation and positioning strategy for the year 2007

 

Current Scenario of Competitors

› Lifetime Fashion Today:

›  Programming Profile : Fashion news ad information

› 63% Female viewership, highest among the three networks

› Mainly targeted age groups 18-34 and 35-54 with viewership of 43% and 42 % respectively

› Average rating : 3.0

 

Current Scenario of Competitors (Contd.)

› CNN Fashion Tonight:

› Programming Profile : Fashion news and features with celebrity focus

› 45% Male viewership, highest among the three networks

› Mainly targeted age group 35-54 with viewership of 40%

› Average rating 4.0 ( highest )

 

The Segmentation Scenarios to choose from

› Scenario 1

› Broad multi-segment approach

› Cross-segment of Fashionistas, Planners & Shoppers and Situationalists

› Scenario 2

› Focus on Fashionistas

› Target group : Females aged 18-34

› Smallest segment targeted, thus drop in viewership

 

 

 

Current Scenarios to choose from (Contd.)

› Scenario 3

› Dual targeting approach

› Targeted segments : Fashionistas and Shoppers & Planners

 

Scenario 1 analysis

› Average CPM decreases by .20, but it gives opportunity of an increase in average rating of 1.2% with revenue $2,376 per minute from advertisements which yield advertisement revenue/year of $249,080,832.

›  This figure is greater than current and base outcomes.

› Brings no extra Incremental Programming Expense

› The increase of expenses as mentioned in exhibit 5, it yields $94,908,407 net income which is slightly higher than current outcome but much higher than base outcome.

Scenario 2 Analysis

› A reduction in average rating of .2% from the current year, it allows a huge increase in average CPM with $3.50 which brings advertisement revenue/year of $322,882,560.

› This figure is far greater than current, base and scenario 1 outcomes.

› The expenses and extra Incremental Programming Expense of $15,000,000

› It yields net income of $151,496,083 which is far higher than current, base and scenario 1 outcomes.

Scenario 3 Analysis

›  the opportunity of both a higher average rating of 1.2% and average CPM of $2.50 than the current and base years which comes up with advertisement revenue/year of $345,945,600

› Not surprisingly higher than current, base, scenario 1 and scenario 2 outcomes.

› The expenses and extra Incremental Programming Expense of $20,000,000

› It yields net income of $168,867,232  which is much higher than all other outcomes. We see also the highest margin of 39% in this scenario.

Conclusion

› After analyzing all the three scenarios as we find that the scenario 3 is resulting in highest margin, it is most fisible and appropriate decision to make.