Product - “The Fashion Channel” (TFC) Year – 2006 Geography – USA Industry – Entertainment Media Characters –

◦ Dana Wheeler (Sr. Vice President, Marketing)◦ Jared Thomas (Founder & CEO of TFC)◦ Norm Frazier (Sr. Vice President, Advertising

Sales)

The Fashion Channel

TFC was a successful cable television started two entrepreneurs in 1996

Channel dedicated to Fashion only Operating 24 x 7 Main audience were women of 35-54 age group Tagline “Fashion for Everyone” Revenues for 2006 were forecasted at $310.6 Million

out of which target was to earn $230 Million through Advertisement.

TFC was very successful but lately regular networks began to copy its concept and market share of it, which as a result, had a negative effect on TFC’s advertising revenue and affiliate fees.

Case Background

Competitive Threat

Customer Satisfaction Parameters

CNN and Lifetime following footsteps of TFC and begun telecast of fashion-related programs at achievable notable ratings

Parameters All TV Viewers

TFC Lifetime CNN

Time Period 24 x 7 24 x 7 M-F, 9-11PM M-F, 8-9PMSat-Sun, 10-

11PM

Average Rating

NA 1.0 3.0 4.0

Average Households

110M 1.1M 3.3M 4.4M

Parameters TFC Lifetime CNN

Customer Interest in viewing

3.8 4.5 4.3

Awareness 4.1 4.5 4.6

Perceived Value 3.7 4.4 4.1

TFC’s average rating was 1.0 110 million TV households in USA i.e. 1,100,000 people

watching at any given time. 6 minutes national ad time, each half hour i.e. 24 hours per

day for a total of 2,016 minutes per week. CPM (cost per thousand) – price than an advertiser would

pay for an “impression” or moment of viewing. Networks were evaluated on their ability to deliver specific

target groups◦ Older or had low family incomes command lower rates for

advertising◦ Premium CPM for certain group i.e. men for all ages and women aged

18-34 TFC Ad Sales team could achieve CPM pricing increasing

25% to 75%

TFC’s Advertising Revenue Model

June, 2006: TFC starts rethinking on the approach to marketing via. Building a modern brand strategy in order to

“Secure TFC’s position as the market leader”

Management Problem

STRENGTH- Dedicated Network for

broadcasting fashion programs

- 24x7 coverage of fashion- Accessible to all cable

customer- Low fees of program

WEAKNESS- Low customer awareness

and interest- Poor market research- No customer segmentation

OPPORTUNITY- Proper segmentation can

increase viewership- Target specific clusters will

increase advertising revenue- Identify proper promotion

strategy

THREAT- Increasing competition- Loss of market share- Loss of advertising revenue- Reducing brand awareness

SWOT

SEGMENTATION

Multifactor Segmenting(Income over $100,000)

Relevant Segments - • Female, 18-34, annual income over $100K• Female, 35-54, annual income over $100K• Male, 18-34, annual income over $1000K• Male, 35-54, annual income over $1000K

Gender All TV Viewers

TFC Lifetime CNN

Male 49% 39% 37%

Female 51% 61% 55%

Age Group All TV Viewers

TFC Lifetime CNN

18-34 30% 33% 27%

35-54 41% 42% 40%

55-74 21% 20% 14% 26%

>74 08% 02% 01% 02%

63%

43%

45%

45%

Cluster Involvement in Fashion

Size of Cluste

r(%HH)

Index Demographic

Highlights

Attitude Drivers

Fashionistas

Highly Engage in fashion

15% 140 Female, 60%Income > $ 100K, 30%18-34, 50%

Anticipate trends / Stay up to date / Think a lot about fashion / Develop fashion expertise to share

Planners & Shoppers

Participate in fashion on regular basis

35% 110 Female, 53%18-34, 25%

Stay up to date / Enjoy shopping / Fashion is practical / Interested in value

Situationalists

Participate in fashion for specific needs

30% 105 Female, 50%Children in HH, 45%18-34, 30%

Enjoy shopping for specific needs / Think about fashion for specific situations

Basics Disengaged 20% 50 Female, 45%Male, 55%

Do not enjoy shopping / Do not spend much time thinking about what to wear/ Interested in value

Attitudinal Research Findings

Male interest occurred in Basics so discarded

Left over Segmentations: -◦ Female, 18-34, annual income over $100K◦ Female, 35-54, annual income over $100K

35-54 already loyal to TFC so target 18-34 age group females i.e. targeted first level segmentation: -◦ Female, 18-34, annual income over $100K

Potential Segment

Management team of TFC has to decide◦ Which customer segment(s)/ “cluster” they

should target in the new marketing strategy?◦ How should they position TFC to ultimately

increase company revenue? Key drivers for revenue growth: -

1. Increased viewership ratings2. Increased advertising pricing

Therefore, TFC must implement market strategy that increases TV ratings and advertising revenue

Decisions to be made

Targeting

Broad based marketing:◦ Broad appeal to cross segments – Fashionistas, Planners/Shoppers and

Situationalists◦ Delivery ratings boost of 20% (1.0 to 1.2)◦ Ad Sales forecasting a 10% drop in CPM to $1.80

Single-segment approach: “Fashionista” Segmentation only◦ Segment was strong in high valued 18-34 female group◦ Smallest group of only 15% households (Drop in veiwership)◦ Deliver a rating of 0.8 (1.0 to 0.8)◦ Ad Sales projection $3.50 CPM (audience stronger in the younger, female-

oriented Fashionista segment)◦ Additional $15million for marketing program

Dual targeting approach - “Fashionista” plus “Planners & Shoppers”◦ Ratings over time to 1.2◦ Potential CPM of $2.50◦ Additional $20 million for marketing program

Target Marketing

Ad Revenue and Financial Calculator

Microsoft Excel 97-2003 Worksheet

Target two segments viz. Fashionistas and Planners & Shoppers that have large concentrations of the 18-34 female demographics

Largest financial return of all the scenarios $168, 867,232

Approx. 17 million more revenue and 2% greater margin than Scenario2, the next closest option

Not as risky as targeting one segment Unlikely to harm relationship with cable

providers

Recommendation

Positioning

TFC should position their marketing plan towards Fashionistas plus planners/shoppers.

Customers preference of both Fashioistas and Planners/Shoppers segments very similar:◦ Stay up to date◦ Enjoy shopping

Position as a fashion channel but same time introduce point of difference for the mentioned customer preference, telecast programs for 18-34 age group women◦ Love to shop◦ Need fashion information on newest trends◦ Cross promotional events with stores in large metropolitan areas.◦ Premier products with 24 hours per day, 7 days per week access

Positioning as a Brand

Thank You