The Fashion Channel
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.
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.% decrease in TV ratings for TFC.
And TFC needs to expand its advertisement expense of 15 million dollars to cover the new programming. Unfortunately, the TFC has to face the losing viewers of other clusters. Also the fashionista segment may be considered too specific to attract new viewers and therefore lose the competitiveness in the competition while its competitors are boarding their customer clusters. 3. Fashionistas& Shopper/Planner Segmentation Pros: In the third segmentation scenario, the ratings could be improved from 1. 0% to 1. 2%, while the average CPM from 2. 00 to $2. 50.
In addition, it could generate additional $115 million net income. On the other hand, applying this segmentation scenario will evidently help TFC increase the advertising revenues. Lastly, the new programme repositions itself and makes TFC differ from its competitors. Cons: This scenario requires a $20 million additional expense for customizing programme. It is clear that TFC has to face more liabilities as well as higher financial risk. For those current subscribers who are excluded, they may feel that they are less concerned, which will lead to the loss of loyalty and decrease of ratings.
Strategic Recommendations The best scenario is to combine Fashionistas and Planners/Shoppers segment. According to the Exhibits3, this scenario captures 50% of US audience. Somehow it may lose some of the existing audience(35-53 female). But in the meantime, it attract new audience group(18-34 female),which means it could bring considerable advertising revenue and achieve ad price premium( increases CPM from 25% to 75%). Implementation Owing to the increased competitions, we would like to use 4Ps strategy to illustrate this implementation.
Price: For the risk of losing existing audience and the $20 million programming expense, it is recommended that TFC increases the advertisement price. Place: TFC should diverse its ways of broadcast, not only on TV, but also on websites and mobile player. Product: In order to satisfy different customers’ needs, TFC’s fashion programs should be more diversified in certain time. Promotion: In order to attract more young female audience, we encourage TFC to invite celebrities to the programs, and display ads on popular websites.