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Case Study Analysis The Fashion Channel

The Fashion Channel was facing declining revenues and increased competition. The new VP of Marketing, Dana Wheeler, proposed three segmentation strategies: target all fashion-related segments broadly, target just "Fashionistas", or target both "Fashionistas and Planner&Shoppers". Targeting the dual segments was identified as the best option, as it would increase profits the most at $115 million while boosting ratings and advertising rates, allowing TFC to better compete against rivals CNN and Lifetime. Though requiring $20 million in new programming, this focused approach was deemed necessary to strengthen TFC's position.

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Govind Ashokkumar
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127 views2 pages

Case Study Analysis The Fashion Channel

The Fashion Channel was facing declining revenues and increased competition. The new VP of Marketing, Dana Wheeler, proposed three segmentation strategies: target all fashion-related segments broadly, target just "Fashionistas", or target both "Fashionistas and Planner&Shoppers". Targeting the dual segments was identified as the best option, as it would increase profits the most at $115 million while boosting ratings and advertising rates, allowing TFC to better compete against rivals CNN and Lifetime. Though requiring $20 million in new programming, this focused approach was deemed necessary to strengthen TFC's position.

Uploaded by

Govind Ashokkumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Case Study Analysis

The Fashion Channel


Situation Analysis

The Fashion Channel (TFC), founded in 1996, was a successful cable TV network. They were the only
network dedicated to fashion, with up to date information and news being broadcasted 24x7. It was
experiencing constant revenue and growth above the industry average till 2006. In 2006 they started
to face aggressive competition from other networks, who were providing meaningful choices to both
viewers and advertisers. In July 2006, they hired Dana Wheeler as Senior VP of marketing to fend off
these threats and to make TFC relevant and profitable again. She developed three strategies to
present to the management, who were still hesitant to change. TFC had to strengthen its competitive
position and would be raising $15Mn over 2006 spending of $45Mn for advertising, promotion and
public relations. Currently they had no detailed segmentation, positioning or branding strategy.

TFC’s main sources of revenue were two-fold – 1. Advertising Revenue, and 2. Cable Affiliate fees.
Advertising revenue was directly linked to the networks Ratings and the demographic they were
pulling in. According to the market research that was conducted, they were lagging way behind their
competitors. Their cable affiliate fees were also at the lower end of the industry spectrum, as they
were a niche network.

TFC faced competition from two primary networks – CNN and Lifetime. Both competing networks had
fashion programming in high viewership blocks that was threatening TFC’s ad revenue. They were also
performing better than TFC in attracting and retaining viewers, which could potentially impact the
revenue from cable affiliates.

Objectives

The objectives of the segmentation strategy that Ms. Wheeler had to present were:

 To Improve their network’s ratings, especially during the slots in which CNN and Lifetime
where broadcasting their fashion programming.
 To engage certain demographic and behavioural market groups that would lead to a rise in
their CPM.
 To gain competitive advantage over current and potential competitors.
 To ensure revenue increase.

Alternatives

Ms Wheeler came up with the below three possible segmentation approaches to achieve these
objectives:

Scenario 1: Target the broad cross segment of Fashionistas, Planner&Shoppers, and Situationalists.

Scenario 2: Target a single segment of Fashionistas.

Scenario 3: Target the dual segments of Fashionistas and Planner&Shoppers.

Scenario 1

Advantages Disadvantages
Net Income increases by $40 million It is not different from the current market strategy
so there will not be any difference in the outcome.
Will reach 100% of the 18 – 34 year old female CPM decreases by 10%
demographic which was missing
No increase in programming costs compared to Does nothing to address the primetime
the other alternatives competition from CNN and Lifetime
Awareness increases as the target market is There is no significant segmentation
broader
TV Rating increases by 20% Profit Margin is only 29%, the least of the three
alternatives

Scenario 2

Advantages Disadvantages
Net income increases by $96 million New programming will cost $15 million
CPM increase by 75% TV ratings decrease by 20%
Profit margin is 37% Only 15% of households would be targeted
Potential to create a core loyal audience Customer awareness would not increase as
target segment is too small.
Challenge CNN and Lifetime for primetime
viewership

Scenario 3

Advantages Disadvantages
Net income increases by $115 million New programming will cost $20 million
TV Ratings increase by 20% Might impact existing customers if programming
changes are radical
Compete with CNN and Lifetime for primetime
viewership
CPM increases by 25%
50% of the households would be targeted
Profit Margin is 39%

Suggested Solution

After analyzing the advantages and disadvantages of all three alternatives, the most suitable approach
seems to be Scenario 3, i.e. to target the dual segments of Fashionistas and Planner&Shoppers. This
approach gives the highest profit margin, and increases both TV ratings and CPM. The other two
alternatives would have resulted in the network being either too niche (Scenario 2) or too broad
(Scenario 1), to have any competitive advantage over its rivals. Even though there is a significant cost
involved with creating new content, it is a necessary expenditure in order to retain a competitive edge.

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