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The Fashion Channel: Case Write Up Essay

1883 words - 8 pages

Jeffrey Florence

The Fashion Channel: Case Write-Up
Decision to Be Made The management team for The Fashion Channel (TFC) must decide which customer segment(s) or ―cluster‖ they should target in their new marketing strategy and how they should position TFC to ultimately increase company revenue. When deciding their marketing strategy, TFC must consider how they can increase their share of the market (ratings) versus the increasingly competitive fashion programming on CNN and Lifetime, and if they can maintain or increase TFC’s satisfaction level among the Large Multi-System Operators. According to Dana Wheeler, senior vice president of marketing for TFC, ―the two key levers to drive ...view middle of the document...

Advertising Revenue The Fashion Channel also implemented their new marketing plan to bolster their advertising revenue. According to the case study, advertisers would ―pay a premium CPM to reach certain groups; in 2006, these were men of all ages and women aged 18-34.‖ Compared to CNN and Lifetime, TFC is currently in an undesirable position in terms of consumer demographics. CNN boasted the best percentage of the male audience at 45% (TFC – 39%) while Lifetime captured the best percentage of the 18-34 female audience at 43% (TFC – 33%). Consumer interest, awareness, and perceived value of The Fashion Channel could be indirectly affecting their advertising revenue. According to an Alpha research study, TFC is below average on many important categories. They received a rating of 3.8 for consumer interest in viewing, a 4.1 on awareness, and a 3.7 on perceived value. CNN and Lifetime outscored TFC by at least .4 points on each question. This could be another consequence of programming for a very specific niche market. Regardless of their market, ―the ad buyers (are) most interested in buying ratings and demographics,‖ so if The Fashion Channel wants to increase advertising revenue, they must find a way to penetrate the certain premium CPM groups.

Alternative Courses of Action Broad-Based Marketing Pros: Compared to the 2007 base numbers, the broad-based marketing scenario delivers almost $40 million more in terms of net income ($94.9 million vs. $54.6 million). Also, compared to the other two scenarios, the broad-based marketing scenario does not require an incremental programming expense that costs the other two scenarios at least $15 million to implement. There are women aged 18 to 34 in all four clusters, so TFC would be marketing to 100% of all 18 to 34 year-olds. Also, because TFC would be investing in a major marketing campaign across all clusters, awareness and viewing of The Fashion Channel would go up. Cons: Although the broad-based marketing scenario produces a higher net income than the 2007 base, the CPM is still $0.20 lower than the current CPM. This $0.20 decrease would take place because TFC’s current target audience would not provide enough maintain the $1.00 CPM. Also, because The Fashion Channel would not target a specific audience under this scenario, TFC would run the risk that their competitors could continue to penetrate the premium CPM groups—causing TFC’s CPM revenue to decrease even further. There would also be a lack of differentiation from what The Fashion Channel’s positioning was before and after the implementation of this scenario. TFC would still struggle to compete with Lifetime and CNN without changing the programming offered by the channel. “Fashionista” Segmentation Pros: Compared to the 2007 base numbers, the fashionista segmentation scenario produces almost $100 million more in terms of net income ($151.4 million vs. $54.6 million). The fashionista segmentation scenario also improved TV ratings from 1.0% to...

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