Essay on The Fashion Channel Case Analysis
1276 WordsFeb 17th, 20116 Pages
Case Analysis Of “The Fashion Channel”
Introduction and Problem Definition
The Fashion Channel case illustrates the development of market segmentation options in implementing marketing strategies in a changing competitive environment, and demonstrates how quantitative analysis may be used to support a strategic marketing decision.
The Fashion Channel (TFC) was a widely available niche cable network which only offers fashion-oriented programming. It was very successful until other regular networks began to copy its concept and take market share of it, which as a result, had a severe negative effect on TFC’s advertising revenue and affiliate fees. The problem is how to develop the segmentation and positioning, change the current…show more content…
λ TFC can pursue competitors’ customers by initiatives for customers’ fickleness.
λ It can gain the preference from ad buyers easily by improving the ratings.
λ It is a right time to gain more profits when this industry is booming.
λ TFC should compete with the regular programming for buying rating and demographics and with the fashion-specific one for contents.
λ TFC has to develop a unique strategy and differentiate its products to prevent copies.
λ TFC will lose attractiveness to cable affiliates if just keeps the worst rating. (See Appendix 1)
λ If the new target group is smaller than the old one, the rating will decrease, which will lead to the losing of ad buyers who use surveys and programs as decision aid.
λ If initiatives can not satisfy most consumers, TFC will lose the cable operator, affiliate and distribution support easily.
Alternative courses of action
Scenario1: Develop a multi-segment strategy, and focus on Fashionistas, Planners & Shoppers and Situationalists between the women aged 18 to 34.
Advantages: Through implementing various marketing tools on new target segment, the rating will increase from 1.0 to 1.2, leading to the increase in average viewers.
Disadvantages: Since there is no real change in viewers’ type and programming, the CPM will drop by 10% or more and competitors will continue taking its market share. (See Appendix 2)
Scenario2: Focus on the Fashionistas segment
The Fashion Channel Marketing
The Fashion Channel (TFC) has enjoyed a calm journey on the top of the fashion-programming niche for almost 10 years. However, there is a frontal attack from market-challengers of two other cable networks to capture market share and revenues from TFC. The CEO is keenly aware that TFC needs a new marketing strategy if they want to remain the market leader. Therefore, he hired a senior vice president of marketing to gather data, analyze the situation and make recommendations to the company as quickly as possible.
The purpose of this study is to review the marketing challenge facing TFC, analyze their consumer and market data, and examine the pros and cons of TFC’s marketing options. This case raises a question for further study: How can a niche brand use technologies to grow their brand and profits while protecting market share and revenue if barriers of entry are low for competitors who share the same technologies and channels of distribution? The Fashion Channel Marketing Analysis The Fashion Channel (TFC) has enjoyed a calm journey as the top of the fashion-programming niche for almost 10 years.
However, they are facing a new frontal attack from market-challengers CNN and Lifetime channels to capture market share and revenues from TFC (Kotler & Keller, 2009, p. 138). It seems that TFC employees know something different must be done to remain the leader in fashion programming, but who will speak truth to power (Welch & Welch, 2005; Stahl, 2007)? We will review the marketing challenge facing TFC, analyze their consumer and market data, and examine the pros and cons of TFC’s marketing options.
Overview of The Fashion Channel’s Marketing Challenge and Data Analysis In 1996 two entrepreneurs, including current CEO Jared Thomas, launched TFC for broadcasting fashion programming through cable television and satellite mediums (Stahl, 2007, p. 1-2). TFC is the only niche network dedicated exclusively to fashion and entertainment and one of the most extensively available networks, reaching almost 80 million U. S. households that subscribed to basic packages (Stahl, 2007, p. 2). TFC expects revenues to reach $310. 6 million in 2006 of which $230. million (74%) would be ad-generated revenues and $80 million from cable affiliate fees (Stahl, 2007, pp. 1-3). From its inception, TFC’s marketing focus was on a broad segment of viewers.
This strategy, along with their unique programming, had allowed TFC to rise quickly as the market leader in fashion television programming. However, because TFC did not have a moat around their idea, other television channels began to duplicate TFC’s concept and gain precious market share from TFC, which severely affected their revenue projections (Kotler ; Keller, 2009, p. 38; Stahl, 2007, pp. 3-4). After seeing his market share under attack, it became obvious to Thomas that TFC needed to reevaluate and modernize their marketing scheme and clearly define their segmentation and positioning strategy based on current situations and trends. Thomas hired Dana Wheeler as senior vice president of marketing and new brand-building programs to develop a new segmenting and positioning strategy that would grow TFC revenues and profits for the future (Stahl, 2007, pp. 1-3). The Fashion Channel’s Marketing Options
According to Wheeler’s analysis of the data received from GFE Associates using attitudinal clusters, a type of behavioral segmentation, there are three segmenting and positioning options for TFC (Kotler ; Keller, 2009, p. 104). An overview of each option, along with their pros and cons are as follows (Stahl, 2007): Option One: Same Segment but More Money for Brand Awareness If TFC invests increased revenue in a major marketing and advertising campaign, awareness and viewership would increase within the same mass-market segment TFC has traditionally targeted.
Pros: Increasing viewership should continue to deliver revenue streams.
Cons: Internal forecasts project that ad revenue rates (CPMs) will decrease at least 10% for the same mass-market audience type. Therefore, the total cost of reaching more of the same audience type might actually cut into profits once CPM rates drop or if rates stay the same and there is not enough increase in the viewers to offset cost of the new campaign.
Option Two: Target the Fashionistas Segment
If TFC turns their marketing expenditures to the Fashionistas, which is a strong fashion minded segment in the highly lucrative 18-34 female demographic, CPM could almost double; yet total ratings could dip almost 20%. Pros: Advertisers would recognize highly targeted viewership and pay premium CPMs. Cons: The current audience will change with programming changes. The new programming will cost at least $15 million and there are no guarantees that the programming will attract the number of Fashionistas needed to offset the expenses and lost viewership.
If either the CPM or the viewer estimations drop, this would be a devastating decision. Option Three: Target Fashionistas and Planners ; Shoppers Targeting both Fashionistas and Planners ; Shoppers, will allow TFC to increase CPM rates and ratings revenue. According to Kotler ; Keller (2009, p. 138), “Some market leaders have even increased profitability by selectively decreasing market share in weaker areas. ” Pros: CPM and viewership will increase thus long-term revenues. Cons: Older segments will drop off, which could be detrimental if new segments leave. Recommendation: Option Three
Wheeler should advocate for targeting Fashionistas and Planners ; Shoppers as the best option for TFC to retain the competitive advantage from market challengers and followers (Porter, 1998; Kotler ; Keller, 2009, pp. 138-139). It may be more expensive in the short-term, but provide long-term revenues for longevity and provide their only chance to draw a line in the sand and define their brand for the future (Welch, 2008). Conclusion CNN and Lifetime are taking market share from TFC by using a frontal attack. Will TFC continue to do what they have always done, or change their strategy now? TFC has several options available to them.
By reviewing the marketing challenge facing TFC, analyzing their consumer and market data, and examining the pros and cons of TFC’s marketing options Wheeler will be able to have an informed and effective conversation with Thomas and TFC staff. References Kotler, P. ; Keller, K. (2009). A framework for marketing management, 5th ed. Boston, MA: Prentice Hall. Porter, M. (1998). Competitive advantage: Creating and sustaining superior performance. Glencoe, IL: Free Press. Stahl, W. (2007, June 1). The Fashion Channel. Boston, MA: Harvard Business School Publishing. Welch, J. ; Welch, S. (2005). Winning. New York, NY: HarperBusiness.
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