Case Analysis - Fashion Channel

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Case Study:
The Fashion Channel (TFC)

June 30, 2009

Overview
The Fashion Channel (TFC), founded in 1996, is a successful cable TV network dedicated to all things fashion. Although quite young compared to other TV networks, TFC has experienced steady growth and in 2006 forecasted its revenue at $310.6 million. TFC operates primarily as a niche network, focused solely on fashion and fashion related programming, but still manages to reach almost 80 million US households that subscribe to cable and satellite television. To date TFC has been able to experience growth in spite of having no clear segmentation, branding, or positioning strategy. Dana Wheeler, a recent hire as TFC’s Senior VP of marketing, was tasked to fix this. Building on her experience in the advertising industry and leveraging the market research available to her, Dana developed three segmentation and positioning strategies that she felt, while leveraging the success and momentum TFC has already experienced, positions the company for a more focused attempt to stave off competition, improve growth of the brand, and ultimately increases profit.

This paper analyses The Fashion Channel (TFC) case study and assesses the market segmentation and position strategies proposed by Dana Wheeler. Below a Strength, Weakness, Opportunity, and Threat (SWOT) analysis is presented, followed by a discussion and analysis of the consumer and market data presented in the case, and finally an analysis and recommendation of the three market segmentation and position strategies proposed by Dana. 1. SWOT

Rapid expansion and growing competition in the advertising market for both cable and satellite television has forced TFC to develop a market, branding and positioning strategy focused on its market leader position, requiring that it fend off new competition like CNN and Lifetime otherwise risk losing market share and advertising revenue. In order to achieve this objective TFC has decided to spend more than $60 million in 2007 in all national and affiliate advertising, promotion, and public relation; representing an increase of $15 million over 2006 year. The following SWOT Analysis presents TFC’s internal environment condition, identifying TFC’s strengths and weaknesses, as well TFC’s external environment condition, identifying TFC’s opportunities and threats. Understanding of these elements is crucial to developing effective market segmentation and positioning strategy. Strengths

Widely available channel – reaching 80 million households. A basic channel. •Full market penetration of cable households
Profitability
Adequate financial resources for marketing
Executive management support for new marketing strategy

Weaknesses
Lack of adequate consumer viewership data
Lacks a clear and detailed segmentation, branding, or positioning strategy •Unable to market effectively to networks that are interested in buying rating and demographics •Offers only Fashion-centric programming

Some resistance to change of marketing strategy – “If it ain’t broke, don’t fix it.” •Pressure to decrease advertising CPM
Lower profit margins – pricing model allowed for market pricing to fluctuate •Lower attractiveness to cable affiliates
Opportunities
Building strategic alliances with advertisers
Targeting the right mix of viewers
Growth potential in advertising revenue
Increase in affiliate fees
Increase ratings in highly valued demographic groups
Build brand loyalty

Threats
Increased competition from other networks – CNN and Lifetime •Lower advertising revenue owing to increased competition •Lack of product differentiation – competitors are able to easily replicate its services •Price competition

Program dropped due to unpopular ratings and viewer overall satisfaction •Churning rate of consumers – “fickleness”
Viewership is directly proportional to ratings – higher the viewership the higher the rating and vice...
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