The Fashionchannel

TheFasionChannel-HBRCase

The Fashion Channel (TFC) was a successful niche cable network, which offered fashion oriented programs to almost 80 million US households. TFC enjoyed a great success by appealing to as broad audience as possible. This approach without any detailed segmentation, branding or positioning strategy was a winner until CNN and Lifetime began adding fashion related programs to their lineup.

TFC's "fashion for everyone strategy" facing with some challenges with the CNN's and Lifetime's fashion specific programming blocks with notable ratings, and beginning to attract TFC's consumers and advertisers. Further, recent Alpha research study on customer's satisfaction showed that when it comes to consumer interest, awareness and perceived value, both the CNN and Life time has outperformed TFC. Competitors and the TFC's inability to adequately differentiate itself from its competitors could threaten the two main revenue streams for TFC, cable affiliates fees and advertising.

Alleviating the situation, the network didn't have much information about its viewer's except that women between 35-54 years were its most avid viewers. This lack of relevant data hindered TFC from clearly differentiating itself from competitors that prompted its leadership, Jared Thomas, to re-evaluate TFC's marketing strategy and he hired Dana Wheeler as TFC's first senior vice president of marketing to develop marketing and brand -building programs to support TFC's continued growth.

From the consumer research commissioned by Wheeler, she found out that the TFC's most loyal customers were females, 39%-61% split in favor of women, and with 33% of viewers aged 18-34 and 45% aged 35-54. Furthermore she found out that there is enormous potential for the network to boost its popularity if it is able to target the noticeable trends in the market segments. For example, some of the trends in the provided market data were:

* About 15% of the women viewers were Fashionistas who give lot of importance to fashion and follow the trends closely. These consumers will spend a lot of money on fashion because they care for it (about 50% have an income more than $100k).

* About 35% of the women viewers were Planners and Shoppers. This segment consists of a more diverse consumer base, who stay up to date on fashions and enjoy shopping.

Thus the Wheeler should position their marketing aspects on the above segments to increase TFC 's pricing ability and advertising revenue. These particular segments would be diverse yet specific groups who would be more focused on the fashion channel instead of watching CNN or lifetime.

Scenario 1 Scenario one deals with launching an aggressive marketing campaign to a broader segment (Fashionistas, Planners & Shoppers, and Situationalists). Although it could increase its viewers by 220,000 (Exhibit 4), this approach could have little effect on drawing advertisers who are interested in particular viewer segments. According to the forecast values this would result in ad revenue increase by about $18.5 million/year (Exhibit 4) compared to 2006, while the net profit margin will decrease by 1% (Exhibit 5). However, this will have a 4% (Exhibit 5) increase when compared with the projected 2007 base value.

Scenario 2 This scenario would focus on the Fashionistas, comparatively small segment, representing only 15% of households and 18-35 female demographics. As a result the number of viewers might drop to 880,000.But with projected increase in ad sales to $3.50 will generate about $92.25 million/year (Exhibit 4) in additional revenue compared to 2006 with 7% (Exhibit 5) increase in net revenue margin, and 12 %( Exhibit 5) net revenue margin increase compared to the projected 2007 net margin. Scenario two will need additional $15 million/year on programming.

Scenario 3 This would focus on the Fashionistas and Planners/Shoppers which is approximately 50% of the market out of which 50% of females. This dual targeting would increase the viewers by 220,000(Exhibit 4) and