Introduction and Problem Definition
The Fashion Channel case illustrates the development of market segmentation options in implementing marketing strategies in a changing competitive environment, and demonstrates how quantitative analysis may be used to support a strategic marketing decision.
The Fashion Channel (TFC) was a widely available niche cable network which only offers fashion-oriented programming. It was very successful until other regular networks began to copy its concept and take market share of it, which as a result, had a severe negative effect on TFC’s advertising revenue and affiliate fees. The problem is how to develop the segmentation and positioning, change the current content of programming, and reach the target customers, so as to get back those market shares from competitors, create more revenues and maintain TFC’s early standing.
λ External Analysis:
There were several hundred competitors in this industry and they took note of TFC’s concepts. TFC faced double-edged competition rendering it have to focus on not only ratings and demographics but also program subjects. Moreover, surveys showed that TFC had the lowest indexes, which actually made its affiliate fee at the low end as well. At the same time, the target consumers of competitors were premium CPM (cost per thousand)’s groups, while TFC only appealed to the less valued group.
Ad industry was booming and competition was fierce. Ad buyers began to use surveys and optimizer programs to make decisions, which made rating and target group become more important to network companies.
In general, consumers were fickle. Their disappointment and switch would lead to the losing of operator, affiliates and distribution support. Besides, according to surveys, the women aged at 18-34 presented both high advertising value and high engagement in fashion. Targeting at this group would gain more profits.