Case Report-1: The Fashion Channel
1- After completing the Ad Revenue and Financial tables for three different scenarios, it can be concluded that the third scenario has the most amount of outcome in financial domain. The outcomes of the scenarios with respect to net income and total revenues are:
1.Scenario: Total Ad. Sales Revenue: $249,0 M Total Net Income: $94,9 M 2.Scenario: Total Ad. Sales Revenue: $322,8 M Total Net Income: $151,5 M 3.Scenario: Total Ad. Sales Revenue: $345,9 M Total Net Income: $168,8 M
Two main goals of the TFC were to increase rating and to increase advertising price, we can see the comparison of the Ad Sales revenues above, if we look at the rating comparison, Scenario 1 and Scenario 3 are forecasted as 1,2% rating while Scenario 2 is estimated around 0,8%. Since, the 2007 base rating is %1, Scenario 3 is the best choice for increasing both rating and advertising prices. The detailed calculations can be found in Appendix.
2- According to the GFE Research, there are four main groups of viewers for TFC. The Fashionistas, Planners & Shoppers, Situationalists and Basics. Dana Wheeler came up with three different segmentation strategies. Let’s analyze these three segmentation options:
Scenario 1: Targeting females who are between 18-34 years old. Pros:
* The Net Income will increase from $54M to $94,9M ($40M more) * There is no re-programming expense, since the target group is distinguished among the three of four main segments. * Targeting 18-34 years old Females satisfying one of the premium CPM conditions of advertisers(the other one is men of all ages). * Ratings will go up from 1% to 1,2% (%20 increase)
* Current Viewers satisfaction is secured, since there won’t be any programming. Cons:
- Lower CPM (from $2 to $1,8)
- There is no specific segmentation that is targeted, so, the competitors may dominate the premium CPM...