2016PGP036 Shubham Ukey

2016PGP041 Utsav Gupta

2016PGP030 S. Lakshmi
2016PGP012 Sumeet Ghodke
2016PGP005 Amit Rajbhar

CASE ANALYSIS: THE FASHION CHANNEL

Problem Statement:

The Fashion Channel (TFC) is dedicated solely to fashion and has experienced
constant revenue and profit growth since its inception. However, other networks have also started adding
fashion related programs to their line-ups. TFC has apprehensions that the competition could provide
meaningful choices to both viewers and advertisers. Hence, it intends to build and sustain a modern brand
strategy and secure the position of the market leader.

Alternatives:
Scenario 2
Fashionistas

Scenario 3
Fashionistas, Planners
& Shopper

Ratings Variations

Scenario 1
Fashionistas
Planners
&
Shoppers,
Situationalists
20% (from 1.0 to 1.2)

20% (from1.0 to 0.8)

CPM

10% (from 2.0 to 1.8)

75% (from 2.0 to 3.5)

Additional
programming cost

Not specified

15 million

20% (from 1.0

to 1.2)
25% (from 2.0 to
2.5)
20 million

Target Segment

Analysis:
2006
1100000

Base 2007
1100000

Scenario 1
1320000

Scenario 2
880000

81600000
2200
23063040
0
31223040
0

81600000
2376

Total Revenue

80000000
2200
23063040
0
31063040
0

330680832

81600000
3080
32288256
0
40448256
0

Cost of Operations

70000000

72100000

72100000

72100000

Cost of Programming

55000000

55000000

55000000

70000000

Ad sales commission

6918912

6918912

7472424.96

9686476.8

Marketing Ad

45000000

60000000

60000000

60000000

SGA

41200000
23521891
2

41200000

Total Expense

40000000
21691891
2

Net Income

93711488

77011488

41200000
25298647
6.8
15149608
3.2

Total Customers
Affiliate Fees
Ad sales (per min)
Ad sales (per year)

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249080832

235772425
94908407.0
4

Scenario
3
1320000
8160000
0
3300
3459456
00
4275456
00
7210000
0
7500000
0
1037836
8
6000000
0
4120000
0
2586783
68
1688672
32

% Margin

30.1

24.6

28.7

37.4

39.4

Evaluation of Alternatives:
Scenario 1
Pros: As compared to the projections for 2007 base, the net income and percent margin are increasing by
23.24% and 16.36%. Also due to major investment in marketing and advertising campaign, awareness and
viewing of the channel might go up over time. Ratings boost of 20% can be expected.
Cons: A 10% drop in CPM is anticipated. The competition might continue to penetrate the premium
segments and further erode TFCs pricing abilities

Scenario 2
Pros: As compared to the projections for 2007 base, the net income almost doubled and percent
margin increased by around 52%. This strategy would help strengthen the value of customer to
advertisers, with a likely increase in CPM. A drop in number of viewers is anticipated.
Cons: A 20% drop in ratings is expected. An additional amount of $15million per year needs to be
spent on programming.
Scenario 3
Pros: The percentage rise in net income and percentage margin is the highest in this scenario
compared to the other two. Average rating expected to increase by 20%. The CPM expected to
increase by 25%.
Cons: An additional amount of $20million is needed for programming. The entire set of existing
viewers is not focussed on which might lead to loss of existing viewers.

Conclusion:
Statistically strategy 3 gives maximum marginal revenue. Compared to strategy 2, lesser risk is
involved as we are targeting a larger fraction of the existing viewers. Strategy 3 strikes a balance
between CPM and the size of the targeted segment.
By using this dual segment targeting TFC will be able to differentiate itself from its competitors and
at the same time not lose a large chunk of market share as is the case with strategy 2.

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Furthermore, TFC must find ways to improve consumer interest, awareness, and perceived value.
Lastly, TFC must be aware of its competition and be ready to differentiate and reposition its
programs in order to earn the best TV ratings and capture the most market share.

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