Submitted by: Group Y2

Gyanasagar A 16S514
Himanshu Jha 16S517
Kavleen kaur 16S522
Priyanka Gupta 16S540
Vinay Sharma 16S554

Marketing management PGP-1 Section 5 Group Y2

 1. Structured and detailed analysis of the situation in front of Dana Wheeler

STRENGTHS: WEAKNESSES:
The Only network dedicated to Poor market research
fashion 24x7 broadcasting Segmentation: POOR
Widely available niche market Target Audience: POOR
Accessibility: HIGH (accessible to all Advertisers are not able to attract a
cable customers) particular target group or cluster
Attractive for advertisers because of: through TFC, resulting in less than
Large no. of subscribers expected ad revenues.
Low advertising fee Reluctance to make drastic changes,
it, in turn, hinders them so far from
developments.

OPPORTUNITIES: THREATS:
New focused advertising strategy Increased competition
Better segmentation Lack of reputation and awareness
Targeting the viewers of certain resulting in loss of market share,
clusters and age groups will increase advertising revenues and audience.
advertising revenue and profit margin. Cable operators might consider
Identifying the prime, most valuable offering TFC in less appealing
consumer groups will bring huge packages thereby losing its broad
profits. audience.
Change might upset current audience
and employees.

According to the SWOT analysis, TFCs competitive advantage will not be sustainable as there
are already other fashion programs from different players (CNN and Lifetime) are eroding its
market share and showing higher audience awareness. In order to sustain in the market, the
company has to develop and renew its strategy and introduce a segmentation approach,
targeting more profitable consumers and specific age groups.
2. Bases of market segmentation
To convince management of the strategic change, Dana Wheeler developed three Strategic
Options: a broad multi segment approach, a focused one segment approach, and a two
segment strategic approach.

Marketing management PGP-1 Section 5 Group Y2

 I. Broad multi segment approach: The first strategy option provided a special focus on
women aged 18-34 with the target clusters as Fashionistas, Planners & Shoppers and
Situationalists.
II. Focused one segment approach: The second strategy option identified offers a
narrow strategic approach exclusively focusing on Fashionistas. Although this cluster
only accounts for 15% of the accessible households, it is most valuable to advertisers.
III. Two segment strategic approach: The third strategy option targeted two segments;
the Fashionistas and the Shoppers & Planners.

Appropriateness of segmentation:

Strategy Option I: Broad multi segment approach

PROS CONS

Reduced risk as approach is 10% drop in CPM to 1.8

consistent with company mission Continued loss of market share
(Fashion for everyone) and past due to strong competition
strategic approaches Loss of advertising revenues
No additional programming costs No strategic improvement or
1.0 to 1.2 increase in ratings development, lack of focus
Less expected internal and
external reluctance due to
minimal changes

From the first strategy plan, we observe that this segment adheres to the Heterogeneous,
Substantial and Reachable criteria of segmentation.
Strategy Option II: Focused one segment approach

PROS CONS

Marketing management PGP-1 Section 5 Group Y2

 Strengthen the value of audience Most competitive segment
to advertisers as it appeals to a
specific segment (Income > 100K) Risk to lose loyal audience

Increased CPM up to $ 3.50 Smallest cluster, less audience

Additional programming costs of $
High focus, unique niche strategy 15 Million
Drop in rating from 1.0 to 0.8
Lack of strategy-company fit
(fashion for everyone)

From the second strategy plan, we observe that this segment adheres to the Homogeneous,
Compatible, Responsive and Measurable (15% of Households) criteria of segmentation.
Strategy Option III: Two segment strategic approach

PROS CONS

Increase in rating from 1.0 to 1.2 Higher programming expenses of

Growth in CPM to $ 2.50 additional $ 20 Million
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

From the third strategy plan, we observe that this segment adheres to the Homogeneous,
Compatible, Responsive, Measurable and Reachable criteria of segmentation.
exhibit4 Ad revenue calculator

current 2007 base scenario 1 scenario 2 scenario 3

TV HH 110000000 110000000 110000000 110000000 110000000
Average Rating 1% 1% 1.20% 0.80% 1.20%
Average Viewers(thousand) 1100 1100 1320 880 1320
Average CPM 2 1.8 1.8 3.5 2.5
Average Revenue/Ad Minute 2200 1980 2376 3080 3300
Ad minutes/week 2016 2016 2016 2016 2016
Weeks/year 52 52 52 52 52
Ad revenue/year 230630400 207567360 249080832 322882560 345945600
Incremental Programming expense 0 0 0 15000000 20000000

Marketing management PGP-1 Section 5 Group Y2

exhibit-5 TFC estimated financials for 2006 and 2007
2006 actual 2007 base scenario1 secnario2 scenario3
revenue
ad sales 230630400 207567360 249080832 322882560 345945600
affiliate fees 80000000 81600000 81600000 81600000 81600000
total revenue 310630400 289167360 330680832 404482560 427545600

expenses
cost of operations 70000000 72100000 72100000 72100000 72100000
cost of programming 55000000 55000000 55000000 70000000 75000000
ad sales commisions 6918912 6227020.8 7472424.96 9686476.8 10378368
marketing and advertising 45000000 60000000 60000000 60000000 60000000
SGA 40000000 41200000 41200000 41200000 41200000
total expense 216918912 234527020.8 235772425 252986476.8 258678368
net income 93711488 54640339.2 94908407.04 151496083.2 168867232
margin 30.1681638 18.89574923 28.70090972 37.45429301 39.4968939

According to the Ad Revenue Calculations,

Though Expenses for Strategy Option 3 are the highest (Exhibit 5) it offers the highest
profit margin (39%).
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.
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.

3. Analysis of Exhibit 1 and Exhibit 2

Exhibit 1:
Among the TV viewers, women constituted a large number in watching Fashion related
content. Maximum percentage of 63% of female viewership for Lifetime: Fashion Today
Among the TV viewers maximum number of viewers constituted the age group of 35-54.
The Fashion channel enjoyed maximum viewership in this age group.
Consumer age group of 18-34 enjoys the second largest viewership for each of the
channels except for Lifetime: Fashion today for which it is the highest, that is, 43%
The consumers with income over $100,000, they constituted only 16% of the total TV
viewership. For the 3 channels their viewership varied with a thin margin.

Exhibit 2:
55% of the consumers wanted to be up to date with fashion trends.
65% of the consumers watch special TV programs on current fashion. Thus, this supports
the fact that Fashion channels competitors, Lifetime and CNN enjoyed higher rating.

Marketing management PGP-1 Section 5 Group Y2

 55% of consumers rely on television reports on fashion to plan what to wear on special
occasions. 59% of the consumers were more interested in fashion.This was highly in
favour of the clusters Fashionistas, planners & shoppers.
For 45% of the consumers, TFC was the favorite channel.
55% of consumers said that they dont need any information on fashion.
42% of consumers considered fashion to be more interesting than many things on
television.
30% of consumers (strongly agree, agree) found TFC to be the best place on television for
fashion information. This percentage needs to be worked upon for TFC to gain more
patronage for itself.

Marketing management PGP-1 Section 5 Group Y2