HBS The Fashion Channel Case
HBS CASE: THE FASHION CHANNEL
Answers by Chenghao Zheng (Chuck)
1. What insight do you get from the consumer and market data?
TFC’s revenue for 2006: $310.6 million ($80 million from affiliate fees and $230.6 million from ad sales)
Strength: the only network dedicated exclusively to fashion, with up-to-date and entertaining information broadcast 24/7
Weakness: no detailed segmentation, branding, or positioning strategy
According to customer analysis: there are four groups of customers, Fashionistas (highest degree of interest in fashion), Planners & Shoppers, Situationalists, Basics (men). GFE’S survey shows: Customers’ preference of TV program---current fashion(65%), shop clothes for special activities (55%), like sports and hobbies (55%), television reports on fashion for special occasion (55%), for entertaining (55%). Most avid viewer: women between 35 and 54 years. Competitors : Lifetime and CNN
The drivers of revenue growth: (1) increase viewership (2) increase advertising pricing. TFC will increase CPM by attracting women aged 18-34
2. What is the expected outcome of each of the targeting scenarios? (complete both the ad revenue and financial calculators to fully understand the financial impact of scenarios)
(1) Broad multi-luster strategy: maintain a broad appeal to a cross segment of Fashionistas, Planners & Shoppers, and Situationalists.
The rating :1.2 CPM: $1.80
No audience differences, easy to lose audiences due to competition
The Ad sales will decrease to 188, 679, 600
The net income will be 36,337,212 The margin will be 13.44%
(2) Focus on Fashionistas: it will strengthen the value of the audience to
Advertiser 18-34 female customers
Rating: 0.8 CPM: $3.5 Need $15 million per year on programming to attract the interest of this segment
The Ad sales will increase to 366,912,000
The total revenue will be 448,512,000 The margin will be 43.3%
(3) Focus on two segments---Fashionistas+the Shoppers/Planners
Rating: 1.2 CPM: $2.50 Need $20 million per
Answers by Chenghao Zheng (Chuck)
1. What insight do you get from the consumer and market data?
TFC’s revenue for 2006: $310.6 million ($80 million from affiliate fees and $230.6 million from ad sales)
Strength: the only network dedicated exclusively to fashion, with up-to-date and entertaining information broadcast 24/7
Weakness: no detailed segmentation, branding, or positioning strategy
According to customer analysis: there are four groups of customers, Fashionistas (highest degree of interest in fashion), Planners & Shoppers, Situationalists, Basics (men). GFE’S survey shows: Customers’ preference of TV program---current fashion(65%), shop clothes for special activities (55%), like sports and hobbies (55%), television reports on fashion for special occasion (55%), for entertaining (55%). Most avid viewer: women between 35 and 54 years. Competitors : Lifetime and CNN
The drivers of revenue growth: (1) increase viewership (2) increase advertising pricing. TFC will increase CPM by attracting women aged 18-34
2. What is the expected outcome of each of the targeting scenarios? (complete both the ad revenue and financial calculators to fully understand the financial impact of scenarios)
(1) Broad multi-luster strategy: maintain a broad appeal to a cross segment of Fashionistas, Planners & Shoppers, and Situationalists.
The rating :1.2 CPM: $1.80
No audience differences, easy to lose audiences due to competition
The Ad sales will decrease to 188, 679, 600
The net income will be 36,337,212 The margin will be 13.44%
(2) Focus on Fashionistas: it will strengthen the value of the audience to
Advertiser 18-34 female customers
Rating: 0.8 CPM: $3.5 Need $15 million per year on programming to attract the interest of this segment
The Ad sales will increase to 366,912,000
The total revenue will be 448,512,000 The margin will be 43.3%
(3) Focus on two segments---Fashionistas+the Shoppers/Planners
Rating: 1.2 CPM: $2.50 Need $20 million per