Case Study: The Fashion Channel
Table of Contents
Proposed Scenarios & Analysis4
Exhibit 1: GFE Associates: National Consumer Survey (excerpts)11
Exhibit 2: GFE Associates: Analysis of Attitudinal Clusters in U.S. Television Households for The Fashion Channel12
Exhibit 3: Ad Revenue Calculator13
Exhibit 4: TFC Estimated Financials14
Exhibit 5: Implementation Schedule15
The Fashion Channel (TFC) is a cable television network that broadcasts 24 hours a day, 7 days a week and is solely dedicated to fashion information. It was founded in 1996 and has experienced constant revenue and profit growth since its inception. In 2006 the network forecasts that revenues would be at $310.6 million which was a marked increase from the previous year. Although the company has experienced constant growth and was the only exclusive fashion television show serving all markets for several years, other cable networks have entered the market and began offering fashion-related programming within their television line-ups. TFC has a very diverse programming schedule that appeals to a wide set of demographics. In the past it was the network’s strategy to not target a specific group of viewers, but to offer programming that would appeal to all viewers.
As competition has increased and since viewers and advertisers have a lower perceived value of the product they are providing, TFC is receiving pressure to lower their price per unit of advertising by 10%. Dana Wheeler is a marketing executive who was hired to help the network identify ways to recapture and maintain market share that is being lost to competitors. The network’s management has been reluctant to change marketing methods and programming because historically their marketing strategy has allowed them to maintain an above average growth to revenue and profits. This case will focus on the information that Ms. Wheeler has available to her and will present the problem that The Fashion Channel is facing, alternative solutions, the recommended solution and then a closing recommendation to the board of directors.
In order to better understand the competitive environment which The Fashion Channel is operating under, we have conducted an analysis following Porter’s 5-Forces model.
* Competitors – Until recently, The Fashion Channel’s programming was exclusive and unique. However after years of growth other news networks and networks targeting women have created shows that will complement their current programming and appeal to other demographics. The Fashion Channel now has competition from CNN news as well as Lifetime, a network specifically targeted to women. The competitors do not offer 24-hour fashion content, but instead integrated short blocks of fashion related programming. The competitor’s programming has scored high marks in consumer surveys and both networks, each a much larger audience than The Fashion Channel, indicating that the competition is strengthening.
* New Entrants – There are no large barriers for entry into this market segment, however, The Fashion Channel has a large benefit for its brand identity since it was the first fashion network established by several years. Recent surveys of viewers report that the quality or interest in programming is falling, which could open up opportunities for new entrants to attract those viewers.
* Substitutes – There are few substitutes when it comes to cable fashion, however the cost or pain of switching to a new network is non-existent. There are no barriers for substitution other than the fact that The Fashion Channel is the only network that broadcasts fashion 24 hours per day, 7 days per week. TFC does not want to lose viewers to Lifetime...