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 TFCs advertising revenue and affiliate fees. The problem is how to develop the segmentation and positioning, change the current content of programming, and reach the target customers, so as to get back those market shares from competitors, create more revenues and maintain TFCs early standing. Situation analysis External Analysis: There were several hundred competitors in this industry and they took note of TFCs concepts. TFC faced double-edged competition rendering it have to focus on not only ratings and demographics but also program subjects. Moreover, surveys showed that TFC had the lowest indexes, which actually made its affiliate fee at the low end as well. At the same time, the target consumers of competitors were premium CPM (cost per thousand)s groups, while TFC only appealed to the less valued group. Ad industry was booming and competition was fierce. Ad buyers began to use surveys and optimizer programs to make decisions, which made rating and target group become more important to network companies. In general, consumers were fickle. Their disappointment and switch would lead to the losing of operator, affiliates and distribution support. Besides, according to surveys, the women aged at 18-34 presented both high advertising value and high engagement in fashion. Targeting at this group would gain more profits. Internal Analysis: TFC was the solely network which had full-time fashion-specific programming in this industry. It had a large consumer market as well. But it chose Fashion for Everyone as theme and did not have any detailed segmentation, branding and positioning strategy nor the audiences information, which was less competitive. Dana wheeler was newly hired VP of marketing to make some change. But the leadership team members who had worked for company for a long time thought that TFC had been highly successful and there was no need to change its traditional theme and put revenue at risk. The marketing initiatives would also upset some employees. So it was hard for Dana to convince them to implement her new marketing strategy. The time for building a well-integrated marketing program was not enough as well.

SWOT analysis Strength: As a niche channel, TFC has potential to be more professional than other regular networks in fashion field, attract specific groups and enhance those groups loyalty. With full-time programming, it can develop different programs in different time to satisfy several segments. (Product Specialization) The large amount of subscribers will become a solid foundation of its revenue. It is easy to do the segmentation as well. It can be received automatically, so TFC has considerable potential customers who has signed up for the cable TV but do not watch TFC. Dana has a strong background in advertising industry, and attracting ad buyers and customers is an important task for TFC. Weakness: Only attracting a wide range of people without concentration will render TFC less competitive and lose the interest from advertisers. The lack of audiences information will make segmentation process more difficult. The full penetration of available cable households limits the opportunity to raise fees. TFC only attracts mid-age females who are less attractive to advertisers. Leadership team members resist change and employees will also become upset by it. Dana lacks the knowledge and experience in network field. Opportunity: TFC can pursue competitors customers by initiatives for customers fickleness. It can gain the preference from ad buyers easily by improving the ratings. It is a right time to gain more profits when this industry is booming. Threat: TFC should compete with the regular programming for buying rating and demographics and with the fashion-specific one for contents. TFC has to develop a unique strategy and differentiate its products to prevent

copies. TFC will lose attractiveness to cable affiliates if just keeps the worst rating. (See Appendix 1) 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. 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 and spend $15 million on programming. (Single segment concentration) Advantages: This segment shows the highest interest in fashion and is strong in high valued 18-34 female demographics, which will deliver a CPM boost. With $15 million on content improvement, it will attract more target consumers. (See Appendix 2) Disadvantages: Fashionistas is the smallest segment in four clusters. It is risky if only target at this group and the average viewers will decrease as well. It also needs additional expense to change the programming which will bring upset to subscribers and employees. Scenario3: Target at both Fashionistas and Shoppers & Planners clusters and spend $20 million on programming. (Product specialization) Advantages: Dual-targeting will ensure the average viewers and rating. It is expected that rating will grow to 1.2 while CPM will come to $2.5. (See Appendix 2) Disadvantages: There is additional $20 million should be draw from the net income. Recommendation After carefully looking at the pros and cons of the three options, I recommend that Scenario 3 is the best solution for Dana. First, the Fashionistas has superior interest in fashion while the Planners & Shoppers

has the largest cluster size. The combination of them will exert TFCs potential (professional and full-time) into full play to compete with both fashion-oriented and regular programming. Second, the Planners & Shoppers will improve the rating, in order to attract more ad buyers and at the same time, the Fashionistas will enhance the CPM to gain more ad revenue (See Appendix 2). Third, as to the financials (See Appendix 3), although it will take additional $20 million on programming, Scenario 3 will still yield $168,867,232 Net Income and 39% Margin, and they are the highest indexes among three scenarios. Last, targeting at two large segments will avoid some risks brought by only focusing on one cluster and the leadership team will be convinced to take measures to change the theme. TFCs new programming content should focus on the latest trends and more professional fashion information (for Fashionistas) and more practical shopping advices (for Planners & Shoppers). Conclusion In conclusion, targeting at two valued groups and then take the product specialization strategy to satisfy both segments is the best solution to this problem. It will create more revenues, make TFC get back market shares quickly, and maintain TFCs leading status.