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.
λ Internal Analysis:
TFC was the solely network which had full-time fashion-specific programming in this industry. It had a large consumer market as well. But it chose “Fashion for Everyone” as theme and did not have any detailed segmentation, branding and positioning strategy nor the audiences’ information, which was less competitive.
Dana wheeler was newly hired VP of marketing to make some change. But the leadership team members who had worked for company for a long time thought that TFC had been highly successful and there was no need to change its traditional theme and put revenue at risk. The marketing initiatives would also upset some employees. So it was hard for Dana to convince them to implement her new marketing strategy. The time for building a well-integrated marketing program was not enough as well.
λ As a niche channel, TFC has potential to be more professional than other regular networks in fashion field, attract specific groups and enhance those groups’ loyalty.
λ With full-time programming, it can develop different programs in different time to satisfy several segments. (Product Specialization)
λ The large amount of subscribers will become a solid foundation of its revenue. It is easy to do the segmentation as well.
λ It can be received automatically, so TFC has considerable potential customers who has signed up for the cable TV but do not watch TFC.
λ Dana has a strong background in advertising industry, and attracting ad buyers and customers is an important task for TFC.
λ Only attracting a wide range of people without concentration will render TFC less competitive and lose the interest from advertisers.
λ The lack of audiences’ information will make segmentation process more difficult.
λ The full penetration of available cable households limits the opportunity to raise fees.
λ TFC only attracts mid-age females who are less attractive to advertisers.
λ Leadership team members resist...