The Fashion Channel: Case Analysis

Statement of the Problem:

1. Increasing power of competitors Lifetime and CNN through their fashion programs
which have higher average rating of 3.0 and 4.0 respectively as compared to The Fashion
Channel’ rating of 1.0.
2. Moreover according to Alpha research TFC was facing additional challenges in its
attractiveness to cable affiliates on all three parameters of consumer interest, awareness
and perceived value.
3. There is a decrease in revenue from Cable affiliates and advertisements.
Causes of the Problem
1. Lack of articulating any detailed segmentation, branding or positioning strategy is the
reason behind competitors taking away their market share.
2. As TFC viewership comes from the women aged between 35 and 54 and even though
they showcase their content 24/7, they are unable to attract any specific segment in the
market. Thus competitors like Lifetime and CNN with their target content were gaining
more popularity
3. According to GFE Associates survey, consumer market consists of 4 clusters, out of
which women in age 18-34 falls under all of these and are a major segment of the market.
TFC failed to target and reach out to this segment.
4. TFC lacked the strategy to recognize the viewers who have an emotional connect with
their channel. Thus there were no brand loyal customers and competitors were able to
easily swipe them away causing a low average rating for TFC.
Decision Criteria and Solution Alternatives:
The below three clusters are analyzed based on the following criteria:
1. How the scheme would impact the quantity of viewers
2. What the CPM advertising revenue potential would be
3. How TFC could be differentiated from current and future competition
Clusters(Alternate Solutions) Pros Cons
Scenario 1(Fashionistas, Planners  Cluster size: 80%  No difference in
& Shoppers and Situationalists)  Increase in rating from segmentation
1.0-1.2  Reduction in CPM to
 Margin : 29% $1.8
 No additional cost of
programming
Scenario 2(Fashionistas)  Targeting a strong  It only targets 15% of
segment of highly valued households
18-34 aged females  Additional cost of
 CPM increases to $3.5 programming $15 million
 Strengthen the value of  Rating falls to 0.8
the audience to advertises
 Margin: 37%
 The Fashion Channel: Case Analysis

Scenario 3(Fashionistas and  Dual Targeting creates a  Additional cost of

Shopper/planners) balance more share in the programing 20 million
market
 Cluster size: 50%
 Rating increases to 1.2
 CPM increases to 2.5
Quantitative Analysis:

Recommended Solution, and Justification:

After analyzing alternate solutions we recommend to imply the scenario 3 of targeting
Fashionistas and Shoppers/ Planners because of following reasons:
1. It targets the highly valued structure of female aged 15-34, which also forms 50% of the
market.
2. Applying this strategy TFC will be able to realize a margin of 39% along with increase in
rating which is comparatively higher than other scenarios
3. This strategy will strengthen the value of the audience to the advertisers, ultimately
increasing CPM.