Fashion Channel Case Analysis

Topics: Cable television, Advertising, Revenue Pages: 5 (1617 words) Published: July 25, 2010
Fashion Channel Case Analysis
Wenwen Gao (872236636)
Introduction and Problem Definition
As the only network dedicated solely to fashion, The Fashion Channel’s (TFC) consistent “Fashion for everyone” strategy is facing challenges by the other two competitors Lifetime and CNN, which are separately targeting young females and men by their fashion-related programming. The channel needs to target the right viewers and offer advertisers an attractive mix of viewers, consequently strengthening its competitive position. External Situation Analysis

Current Networks Industry
In 2006, consumer advertisers spent almost $20 billion on cable networks. In the industry, there are more than 700 cable networks, and most networks’ revenue stream comes from cable-affiliate fees and advertising sales. As a basic network which is automatically received by customers when they sign up for basic cable service, TFC has already achieved full penetration of available cable households and there is limited opportunity to raise fees. Advertising sales becomes a key weapon of TFC’s growth opportunity. Advertising campaigns among networks make the marketing price go up and down all the time. Nowadays most networks are trying to increase their ratings because the ad buyers are more interested in buying ratings and demographics than in specific programming subjects. Other than that, traditional networks have fixed supply of advertising because they have long-term loyal business relationships. It’s not that easy for other networks such as TFC to get these ad customers from them. Competitors of TFC

Lifetime and CNN are the two biggest competitors of TFC. They start to offer fashion-specific programming and attract advertisers by their higher ratings, the audience’s characteristics, and competitive trends. Consumer behavior

Competitors such as Lifetime and CNN have been targeting fashion-specific programs. Now consumers have more choices. When looking at Alpha research study on customer satisfaction, we find that when it comes to consumer interest, awareness and perceived value, both CNN and Lifetime have higher scores than TFC does. Both the ratings and the research show that non-loyal consumers are starting to choose alternatives to TFC. Advertising buying process becomes sophisticated. Many advertisers are using tools such as surveys to analyze and target customers and audiences. And then they will figure out the best fit networks. Internal Situation Analysis

Successful cable TV network with constant profit growth
TFC ‘s main focus is solely on fashion which is broadcast 24 hours of the day and 7 days a week. The channel reaches around 80 million viewers in US households, among which most are women between 35 to 54 years of age. From 1996 to 2006, TFC enjoyed great success by attracting as broad an audience as possible. Before other significant competitors appeared, their “fashion for everyone” approach worked pretty well. Experienced management team

Dana Wheeler, senior vice president of marketing, had a strong marketing background in the advertising industry. Norm Frazier, senior vice president of Advertising Sales, is a high-energy salesman with strong ad sales performance. With the growing competition in the industry, most members of the leadership team are urging to change the current situation. No correct identification of consumer segmentation

While Lifetime is taking away ad buyers by targeting younger female viewers, and while CNN is delivering fashion information and news to men, TCF is still using their out-of-date strategy. Besides its basic demographic, the channel didn’t have detailed information about its valued viewers. In failing to target correct consumer segmentation, TCF will lose the customers, both of viewers and advertisers. However, since TFC’s customer satisfaction score is still above the midpoint, changing the segmentations of the company might upset some current viewers who enjoy the...
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