Part 1A: You will be responsible for reading the corresponding case and submitting your individual work as an assignment and in your team discussion forum by the specified due date (see course schedule/ for details). Be reminded that there are two parts to Case 1:Part 1A Questions and Part 1B, which is the corresponding excel spreadsheet with the financial analysis. A word of advice, read the case carefully, including the exhibits and the footnotes. The information in the fine print is relevant.
The Fashion Channel
1. What are the pros and cons of the three segmentation scenarios? Read carefully the case and make a list of the pros and cons of each segmentation scenario. Use the following table to summarize your findings.
| Scenario 1: Broad-based Segmentation Targeting | Scenario 2: Fashionista focus| Scenario 3: Fashionistas + Planners/Shoppers| Pros| * Mixed based audience. * Investment in major marketing and advertising campaign, awareness and viewing of the channel would increase; deliver a rating boost of 20% (from the current 1.0 to 1.2.)| * Targets females ages 18-34. * Strengthen value of the audience to advertisers and increase CPM and deliver a rating of 0.80. * Projection of a $3.50 CPM.| * Dual targeting would drive ratings to 1.2 with a potential CPM of $2.50.| Cons| * If this broad based audience mix stayed the same, Ad Sales are forecasted a 10% drop in CPM to $1.80. * Risk of competition would continue to penetrate the premium segments and erode TFC’s pricing ability.| * Smaller than the other segments, representing 15% of households. * Possible drop in viewers. * Spend additional $15 million per year investment in new programming to attract and retain segment interest.| * Spend additional $20 million on programming to ensure selections aimed at both segments.|
2. What Segmentation scenario is likely to produce higher revenues?
Based on TFC estimated financials...