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PRIYANKA - 16202042
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RISHAV - 16202112
About The Fashion Channel
Founded in 1996 as the first TV cable network devoted only to fashion (24/7)
Constant revenue and profit growth above the industry average since the
beginning
$310.6 millions as revenue were forecasted for 2006
Niche networks reaching almost 80 million U.S. household
Women between 35 and 54 years are most avid viewers
No details about viewers in general and no attempt to focus on any segment
TFC marketing massage Fashion for Everyone trying to achieve highest
viewership numbers
Main competitors: Lifetime and CNN
Main Sources of Revenue
Generally TFC had two main sources of revenues:
1) Advertising Revenue model:
Target to achieve $230.6 million of revenues generated by advertising.
The adverting business model was based on Rating (the % of TV households watching on average
during measured viewing period.)
TFC average rating 1.0 with 110 million TV households in U.S. TFCs average was 1,100,000
viewers at any point of time.
TFC should focus on their ratings and demographics, because the ad buyers are interested in
them and not interested in specific programming subjects.
Lifetime and CNN offered strong fashion programming blocks not dedicated fashion
channels, which represented a double-edged competitive challenge
If Lifetime and CNN were successful that would attract more networks to
copy their concept.
The advertising pricing is expressed as CPM (Cost Per thousand.)
Main groups of viewers that
advertisers were interested in
are:
Men of all ages
Women aged between 18-34
Wheeler had to react against these new programs, so she focused on previous
research study on customer satisfaction.
This study showed that TFC was facing competitive challenges in its
attractiveness to cable affiliates.
The scale used from 1 to 5 (5 is highest possible score) The previous data was used by cable operators to
determine how much to pay for each network.
SWOT Analysis for TFC to obtain new
segmentation and positioning strategy
STRENGTHS WEAKNESSES
TFC was the only dedicated network to Most of the management unwilling to change
fashion 24/7 to new strategies
CEO wants the change with $60 million in Using generalization market strategy
budget Fashion for Everyone
Dana Wheeler with good experience in Bad position vs. competitors Low average
advertising rating & Low number of HH
OPPORTUNITIES THREATS
Finding loyal untargeted segment Lifetime & CNN with new programs
attracting more and more viewers
Ability to increase rating and Households Viewers may not like new programs, which
rating, and increasing profit may lead to drop of TFC out of main cable
operators
Main Problems to Solve for TFC
strategy
Market Research
Findings
Wheeler was interested in the most recent consumer research reports,
which are mainly 2 reports.
1. Highlights of a national consumer field study
Which is a list of questions about consumers attitudes toward fashion and TFC.
Female: 45%
Basic Disengaged 20% 50
Male: 55%
According to the previous market research findings Wheeler found
several possible multi-cluster schemes, each of these solutions should
be judged according to the following three questions:
After analyzing the previous results from researches Wheeler found that
(Basic Cluster) is all men, so it would be unwise to target more men viewers,
instead TFC should focus its segmentation and positioning on women,
particularly between the ages 18-to-34.
Since that segment (women aged 18 to 34) were included in all of the
clusters, she found three segments that should be targeted.
1) Board appeal to a cross segment of: Fashionistas, Planner & Shoppers and
Situationalists.
2) Single segment approach: Fashionistas
3) Two segment approach: Fashionistas and Planner & Shoppers
Segment 1:
Fashionistas, Planner & Shoppers and
Situationalists
Revenue
Ad. Sales $230.63 $207.57 $249.08 $322.88 $345.95
Affiliate Fees $80.00 $81.60 $81.60 $81.60 $81.60
Total Revenue $310.63 $289.17 $330.68 $404.48 $427.55
Expenses
Cost of Operations $70.00 $ 72.10 $72.10 $72.10 $72.10
Cost of Programming $55.00 $55.00 $55.00 $70.00 $75.00
Ad Sales
$6.92 $6.23 $7.47 $9.69 $10.38
Commissions
Marketing and
$45.00 $60.00 $60.00 $60.00 $60.00
Advertising
SGA $40.00 $41.20 $41.20 $41.20 $41.20
Total Expenses $216.92 $234.53 $235.77 $252.99 $258.68
Net Income $93.71 $54.64 $94.91 $ 151.50 $168.87
Margin 30% 19% 29% 37% 39%
Scenario 1:
Analysis
Advantages Disadvantages
No incremental programming expense vs. Did not change the current market strategy so
scenarios $15 and $20 Million not improving the current position
Reaching 100% of all 18 to 34 year-olds female Harder to compete vs. CNN and Lifetime
TV Rating increase 20% CPM decrease 10%
Targeting 50% of U.S. TV Households, of which Might decrease loyal customers if they are not
50% female and 25% of them are 18-34 age included in these segments