The Fashion Channel Case
Due Date: 9/30/2013
Here at The Fashion Channel (TFC), the management team needs to decide which customer segments that we should target when implementing our new marketing strategy. Based on current environmental trends, state of the economy, current cultural, social, and political conditions, we as team need to find a way to position ourselves to ultimately increase company revenue. In doing this we need to focus on ways to increase our share of the market (targeting ratings), and how we can ultimately target ways to boost our viewership versus the increasingly competitive fashion programming being released by CNN and Lifetime. The “two key levers to drive revenue growth would be increased viewership (ratings), and increased advertising pricing.” Also important is to deliver quality audiences, as demanded by advertisers. Based on these key issues it will be vital to choose the scenario for implementation that will increases TV ratings and advertising revenue.
The state of the economy at the beginning of 2007 was promising (pre-housing bubble and job loss). The Fashion Channel at that time had been around for 11 years. The company was started by two entrepreneurs in 1996, with up to date entertainment features that focused on material relating to fashion only on 24 hour a day, 7 days a week schedule. To that point the main audience was women aged 35-54 and the company tagline was “Fashion for Everyone.” Coming off of revenues of $310.6 million and only $230 million in ad sales, the goal going forward was to find a way to increase that amount. In 2005, one of the more popular series’ on TFC was a show called “Look Great on Saturday Night for Under $100.” Other networks like CNN and Lifetime began following the programming plan put on by TFC which started to become more popular in comparison to the programs being broadcast by TFC. This in effect resulted in direct competition against TFC and directly affected the ad revenue shares. Vice President Norm Frazier had advised the management team to decrease the ad pricing by 10% in order to increase our viewership.
As mentioned earlier, a key issue to attack in this marketing plan is to improve our average rating compared to similar programming being broadcasted on CNN and Lifetime. Utilizing information obtained in Exhibit 1, TFC’s average rating was 1.0 based off of 1.1 million households. In comparison, CNN relished an average rating of 4.0 (4.4 million households) while Lifetime enjoyed an average rating of 3.0 (3.3 million households) respectively. Major differences exist amongst these three networks based on the fact that TFC’s programming only revolves around fashion 24 hours a day, 7 days a week, whereas CNN and Lifetime serve a larger target audience and therefore only present programs dedicated to fashion Monday through Friday from 9-11pm (Lifetime) and Monday through Friday from 8-9pm and Saturday and Sunday from 10-11pm (CNN). Because these networks are not devoted to a specific niche, it allows them 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.
The other key objective of The Fashion Channel’s new marketing plan was to boost advertising revenue. On pages 3 and 4 of the case study, it is noted that advertisers would “pay a premium CPM (cost per thousand, represented by the price an advertiser would pay for a moment of viewing) to reach certain groups, and at the time of this study these groups were men of all ages and women aged 18-34, respectively. Based on information in Exhibit 1, TFC is currently in the most unfavorable position amongst the big three networks based on consumer demographics. CNN carried the best percentage of the male audience at 45 % while TFC at 39%. Lifetime carried the best percentage of the 18-34 female audience at 43% while TFC captured just 33%. Lack of consumer interest, awareness, and value...
Please join StudyMode to read the full document