The Fashion Channel.docx

7/30/2019 The Fashion Channel.docx

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1. Executive Summary

This is the analysis of The Fashion Channel, a fashion -oriented programming which is evaluating 3possible scenarios to be in the top position amongst its competitors. On the basis of the advantages anddisadvantages of our analysis Scenario 3 seems to be the marketing strategy which they should focus

upon.

2. Marketing Mix

Product 24*7 Fashion Channel Up-to-date and entertaining features and

information A channel for masses Niche network

(Pgs. 1,2)

Price Charging CPM of $ 2.00 to the advertisers Subscriber fee averaged $ 1.00 per subscriber

per year Subscriber fee was is collected from multi-

system operator(MSO)

(Pg. 4)

Place Current penetration is 80 million U.S.

households subscribed to cable and satellitetelevision

(Pg. 2)

Promotion Fashion for everyone is the theme of

channel Its most popular series Look Great on

Saturday Night for Under $100 is targeted atmasses

A 24*7 dedicated fashion channel

(Pgs. 1,2)

3. 5 Ps

Product :-

A successful television network dedicated solely to fashion Specialized in updated entertaining features and information broadcast 24 hours per day, 7 days

a week So far it was the only TV channel dedicated for the purpose but recently it has been facing

competition from upstarts in the fashion segment such as CNN and Lifetime Has experienced steady revenue and profit growth in above the industry average almost since

its inception Niche network, reaching almost 80 million viewers


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Price :-

Price for Advertisers (in CPM) *:- Current (2006): CPM=1.0% Scenario 1: CPM = 1.2%

Scenario 2: CPM = 0.8% Scenario 3: CPM = 1.2%

Price for cable operators :- Negotiated subscriber fee = $1.00 per subscriber per year

Place:-

US households that subscribed to The Fashion Channel

Promotion:-

Initially did not attempt to implement any kind of segmentation in particular Relied on a broad based marketing strategy described by Fashion for Everyone Wheelers plan - to build a strategy for segmentation based on one of the scenarios (see

Qualitative Analysis) and employ all the marketing tools traditional and internet advertising,public relations and promotions.

Physical Distribution:-

Provided to viewers through cable affiliate distribution networks such as Comcast, TimeWarner, Cablevision, Cox etc.

*CPM = Cost per thousand

4. K

Challenges and Opportunities for TFC:

Other networks are adding fashion related programs. TFCs position as the market leader is in danger (Pg.2)


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Currently, women between 35 and 54 years are its most avid viewers. Advertisers are ready to pay apremium CPM to reach other groups especially men of all ages and women aged 18-34 years. This canachieve CPM price increase from 25% to 75% (Pg. 4)

TFC is positioned as a basic channel and attractiveness to cable affiliates in terms of viewing andperceived value is facing competitive challenges (Pg. 5)

If the TFC underperforms, it could be offered in less appealing packages (Pg. 5) TFCs average rating was much lower as compared to other channels program (Exhibit 1)

Segmentation and Targeting Strategies for TFC:

As per the data of GFE Associates, the whole population was segmented into four clusters depending onthe attitude and involvement in Fashion of the U.S. population (Exhibit 3)

Based on Exhibit 3, the four demographic segments identified were:1) Fashionistas: 15% of Population Highly engaged in fashion Female 61% 18-34 Age 50% High Income Highly Interested in Fashion on TV

2) Planners & Shoppers: 35% of population Participate regularly

Female 53% 18-34 Age 25% Moderately Interested in Fashion on TV

3) Situationalists: 30% of population Participates only for Specific needs Female 50% 18-34 Age 30% Moderately Interested in Fashion on TV

4) Basics: 20% of Population Highly Disengaged Female 45% Male 55% Rarely Interested in Fashion on TV

Targeting:


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The two drivers for revenue growth for TFC would be increased viewership and increased advertisingpricing (Pg. 4)

Advertisers are interested in men of all ages and women aged 18-34(Pg. 4) Challenge is to identify the core group who can be loyal to network and have an emotional connect to TFC

(Pg. 5) Most of the male interest occurred in the Basics Cluster and are least likely to be engaged with TFC (Pg. 6)

Based on the consumer behavior and attitudes, women aged 18-34 in all of the clusters should be thetarget for TFC (Pg. 6)

Qualitative analysis

Scenario 1:

Benefits:

Major marketing, advertizing campaigns and programming would increase awareness and boostthe viewing of the channel by 20% [1]

The Average revenue/Ad would be $2,376 which is a 20% increase over the projected 2007 Baseyear (See Appendix)The $0 incremental expenses will give it a competitive advantage [1] The CPM would decrease by 10% (1.8), when compared with the projected 2007 Base year, dueto the mass marketing approach (Projected by Ad Sales [1])The implementation of this plan may result in a net income increase of 73.69% [5] (See Appendix)

Challenges:

Broadening the viewer base might not address the current challenge that TFC is facingLifetime and CNN would also jump into the advertizing bandwagon and pose a greater threat toTFC

([1] Page 6: paragraph 6)

Scenario 2:

Benefits:

The targeting of a segmented market that comprises of only 15% of the total cluster size, wouldreduce the average rating to 0.8 [2] The Average revenue/Ad would be $3,080 which is an increase of 55.67% over the projected2007 Base year (See Appendix)The incremental expenses of $15,000,000 will help maintain the average revenue/ year of $322,882,560 (See Appendix)This segmentation would strengthen the value of the audience to the advertisers, and would likelyincrease the CPM to $3.5 [3]

The implementation of this plan may increase the net income by 177.26%[5]

(See Appendix)Challenges:

The demographic segmentation would account for only 15% of the householdsThe incremental expenses of programming will be a substantial liability for the channel in thefuture

([2] Page 6: paragraph 7),


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([3] Page 7: paragraph 1)


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Scenario 3:

Benefits:

The dual targeting would, overtime, drive average ratings to 1.2 [4] The Average revenue/Ad would be $3,300 which is an increase of 66.67% over the projected2007 Base year (See Appendix)The incremental expenses of $20,000,000 will help maintain the average revenue/ year of $345,945,600 (See Appendix)The increased size of the target audience (50% of the total cluster) would likely increase the CPMto $2.5 [4] The implementation of this plan may increase the net income by 209% [5](See Appendix)

Challenges:

As this plan would be implemented over a period, the externalities in the environment may pose athreatThere exists a possibility of losing some of TFCs most loyal consumers by re -positioning thechannel towards fashionistas and planners/shoppers.

([4]

Page 7: paragraph 2)

([5] as compared to the projected 2007 Base year)

Recommendation:

The benefits outweigh the inherent risks involved in Scenario 3. Fashionistas and planners/shoppersmake up about 50% of all US Television Households, and in their specific clusters, the 18-34 femaleaudience market represents 50% and 25% of the cluster respectively (See Appendix). The 39% margin isa good indicator of the profitability of Scenario 3(See Appendix). Therefore, TFC would be able to garner higher TV ratings from this scenario. They will also be able to leverage the premium factor associatedwith this sector to increase the advertizing revenue.

Per the analysis, it seems that The Fashion Channel can best increase its revenue by re-positioning thechannel towards fashionistas and planners/shoppers. However, as the implementation would happenover time, TFC should scan the environment for externalities and address them effectively.

The Fashion Channel.docx

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