The successful cable TV network “The Fashion Channel” founded in 1996 is now being faced with an intensely fast growing competitive environment. In order to strengthen the company’s brand with viewers and advertisers TFC should position their new marketing strategy towards Fashionistas and Planners & Shoppers. By focusing on dual segmentation, this scenario positions itself in a specific demographic of females that can offer great benefits. The opportunity TFC can expect includes increasing their average ratings, along with increases in their average CPM, and an approximate 40% increase in their margins.
According to Exhibit 3, 50% of US Television Households are made up of the segment of Fashionistas and Planners & Shoppers. Females between the ages of 18-34 make up 50% of Fashionistas and 25% of Planners & Shoppers. Throughout history fashion has been viewed as a type of luxury that more recently is being harnessed by women of the millennial generation in this age demographic. Based on the data provided in the case, focusing on this scenario produces an increase of almost $115 million in net profit in comparison to the base numbers shown in 2007. Although TFC has never implemented a program like this and the high repositioning cost of $20 million is daunting, shifting their market to this demographic offers many benefits.
This scenario claims to improve TV ratings from 1.0% to 1.2% along with increasing the average CPM from $2.00 to $2.50. CPM is a measurement of how much money it will cost someone for their advertisement to reach 1,000 viewers through a specific channel. Therefore, due to the increase in premium CPM that this female demographic is projected to...
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...rs the option to watch live on their mobile devices or later on-demand. Accessibility and affordability are motivating factors for this generation therefore, TFC must prove that they have programs that are worth paying for. The same goes for the established older consumers, they want to know that their needs have been met and they will grow older with the channel they have always loved.
To improve consumer interest and perceived value, The Fashion Channel needs to prove to their audience that they offer something no one else can offer them. Their greatest bet to advance against competitors would be to harness their credibility in the fashion industry. Channels mentioned in the case such as CNN and Lifetime more recently produced successful fashion programs, but The Fashion Channel was founded on the sole dedication to bring the world of fashion to their viewers.
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