The Fashion Channel: Case Write-Up
Decision to Be Made The management team for The Fashion Channel (TFC) must decide which customer segment(s) or “cluster” they should target in their new marketing strategy and how they should position TFC to ultimately increase company revenue. When deciding their marketing strategy, TFC must consider how they can increase their share of the market (ratings) versus the increasingly competitive fashion programming on CNN and Lifetime, and if they can maintain or increase TFC’s satisfaction level among the Large Multi-System Operators. According to Dana Wheeler, senior vice president of marketing for TFC, “the two key levers to drive revenue growth would be (1) increased viewership (ratings), and (2) increased advertising pricing.” Therefore, the scenario that The Fashion Channel will implement must increase TV ratings and advertising revenue. Relevant Facts Ratings One of the most important goals of The Fashion Channel’s new marketing plan was to improve their average rating compared to similar programming on CNN and Lifetime. According to Exhibit 1, TFC’s average rating was 1.0 (1.1 million households), while CNN and Lifetime enjoyed average ratings of 4.0 (4.4 million households) and 3.0 (3.3 million households) respectively. A major difference between The Fashion Channel and the other two networks is the time period of their programming. The main purpose of TFC is fashion and therefore programs around fashion 24 hours a day, 7 days a week. CNN and Lifetime, however, serve a larger purpose than fashion, and therefore only present programs dedicated to fashion Monday through Friday from 9-11pm (Lifetime) and Monday through Friday from 8-9pm and Saturday to Sunday from 10-11pm (CNN). Because they are not devoted to a specific niche, CNN and Lifetime have the opportunity to capture a larger audience that may have never looked for fashion programming if it weren’t for Fashion Today and Fashion Tonight. Advertising Revenue The Fashion Channel also implemented their new marketing plan to bolster their advertising revenue. According to the case study, advertisers would “pay a premium CPM to reach certain groups; in 2006, these were men of all ages and women aged 18-34.” Compared to CNN and Lifetime, TFC is currently in an undesirable position in terms of consumer demographics. CNN boasted the best percentage of the male audience at 45% (TFC – 39%) while Lifetime captured the best percentage of the 18-34 female audience at 43% (TFC – 33%). Consumer interest, awareness, and perceived value of The Fashion Channel could be indirectly affecting their advertising revenue. According to an Alpha research study, TFC is below average on many important categories. They received a rating of 3.8 for consumer interest in viewing, a 4.1 on awareness, and a 3.7 on perceived value. CNN and Lifetime outscored TFC by at least .4 points on each question. This could be another consequence of programming for a very specific niche market. Regardless of their market, “the ad buyers (are) most interested in buying ratings and demographics,” so if The Fashion Channel wants to increase advertising revenue, they must find a way to penetrate the certain premium CPM groups.
Alternative Courses of Action Broad-Based Marketing Pros: Compared to the 2007 base numbers, the broad-based marketing scenario delivers almost $40 million more in terms of net income ($94.9 million vs. $54.6 million). Also, compared to the other two scenarios, the broad-based marketing scenario does not require an incremental programming expense that costs the other two scenarios at least $15 million to implement. There are women aged 18 to 34 in all four clusters, so TFC would be marketing to 100% of all 18 to 34 year-olds. Also, because TFC would be investing in a major marketing campaign across all clusters, awareness and...
Please join StudyMode to read the full document