The Fashion Channel Case Study

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CASE STUDY:

The Fashion Channel

Case study: The Fashion Channel
Opening

Lacking of detailed segment, branding and positioning strategy and increasing competitors which have put forward the similar fashion program forced TFC to change its marketing strategy for future growth. Therefore, targeting and positioning the market are of great importance. However, TV ratings and advertising revenue are necessarily to be accomplished by segment TFC.

Key facts

1. Customer Analysis According to the research, customers could be divided into two groups: viewers and advertisers. Overall, women between 18 and 34 with low family income are the most target group. Additionally, a great number of people who are fashion-conscious are considered. However, the rating of TFC for consumer interest in viewing is 3.8, 4.1 on awareness, and a 3.7 on perceived value. In terms of demographic groups with high ratings, TFC could achieve an increase in CPM from 25% to 75%. So, TFC needs to find a way to reach certain CPM groups to increase its advertising revenue.

2. Competitors Analysis TFC, CNN and Lifetime are three giant players in the fashion channel market which comprises 110 million television households in the United States. Exhibit 1 shows the average ratings figures for each company concerning viewers over 18 years old. Scores are 1.0 (1.1 million households), 3.0(3.3 million households) and 4.0 (4.4 million households) respective. As for the advertising revenue from female audience of the age of 18 through 34, there is a big gap between Lifetime and TFC. The percentage for Lifetime is 43% which is 10% higher than TFC. With both the male and female audience aged 54 through 74, CNN accounts for 45% and 26%, while TFC only has 39% and 20%. From the above data, it is easy to draw the conclusion that TFC is in an unfavorable position. However, when we take the time schedule into consideration, it might be argued that TFC has an unbeatable advantage over CNN and Lifetime. Fashion Channel’s program plays around 24 hour a day each week, which creates a great freedom choice for viewers with different background. However, CNN has only two hours from 9 to 11 p.m. in weekdays and Lifetime has only one hour from 8 to 9 p.m. in weekdays and one hour from 10 to 11 p.m. in weekend. This means that TFC has a great niche market of about 80 million U.S. households. It will not be easy for CNN and Lifetime to emulate this, since their switching cost will be very high.  3. Corporation Analysis At the early stage of 2005, TFC set the strategy as “Fashion for Everyone. Catering to the fierce competition in 2006, TFC employed “all of marketing tools-traditional and internet advertising, public relations and promotions-to reach the target consumers with integrated positioning message”. Segmentation Options

1. The broad multi- segmentation (Fashionistas, Planner& Shoppers and Situationalists): Pros: The TFC fully focuses on the targeting market (women aged from 18 to 34). It donates 94.90 million dollars in the net income and it is almost doubled by the 2007 base which is 54.6 million dollars. And awareness and viewing are expected to grow up, hopefully the rating changes from 1.0 to 1.2. Cons: The CPM shows a 10% drop from the current CPM. And The Fashion Channel would not focus on a specific cluster under this scenario and runs the risk that their competitors, such as Lifetime and CNN, continue to penetrate the premium segments, further decrease TFC’s revenue.

2. The ‘fashionistas’ segmentation
Pros: The fashionista segmentation scenario targets only on the women aged from 18 to 34 and hence, strengthen the value of the audience to advertisers. It provides almost $100 million more in terms of net income compared to the 2007 base numbers. Cons: The fashionista segmentation scenario leads to a 0.2% decrease in TV ratings for TFC. And TFC needs to expand its advertisement expense of 15 million...
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