MM1 - Assignment 13
Ashish Patel Roll No. - 190101033
Q1. Calculate Margin for all scenarios Answer:
Answer -
Q2. Define pros and cons of all scenarios
Answer:
Scenario – 1:
Pros
1. In comparison with 2007 base, it will
generate $ 40.26 million more as net
income.
2. No incremental programming expense
with respect to other scenarios
3. Reach is 100% to all 18-34 year old
female
4. Rating is increased by 20%
5. Increase in awareness since all market
cluster were targeted
Section -E
Cons
1. CNN and Lifetime could continue to act
on penetrating the premium CPM
segments
2. Market strategy wasn’t changed so
current position did not improve
3. It was still harder to compete with CNN
and Lifetime
4. CPM is decreased by 10%
5. No specific cluster of segment was
targeted
 MM1 - Assignment 13
Ashish Patel Roll No. - 190101033 Section -E

Scenario -2:

Pros
1. Compared to 2007 base, it will generate
$96.8 million more in terms of net
income
2. CPM got increased by 75%
3. Focus on female in the age group of 18-
34
Cons
1. Additional $15 million cost for the new
incremental programming
2. TV rating got decreased by 20%
3. Reduction in customer awareness in
view of reduced TV ratings
4. Targeting only 15% of households

Scenario -3:

Pros
1. Compared to 2007 base, it will generate
almost $115 million more in terms of
net income
2. TV rating got increased by 25%
3. CPM got increased by 25%
4. Different offerings for both Fashionistas
and Shoppers and Planners
Cons
1. $20 million for the additional new
incremental programming
2. Might decrease loyal customers if they
are not included in these segments
3. Could decrease rating in the long run

Q3 . Which scenario seems to be the best choice for TFC?

Answer: Going by the revenue calculations, it is quite evident that scenario 3 is the most profitable
scenario creating the maximum revenue and hence TFC should move forward with it that is targeting
two segments in the market (Fashionistas and Planner & Shopper).

This will generate the largest financial return compared to the other scenarios, also will generate the
highest margin. It is focusing on specified segments that will increase the awareness and improve the
competitive position with respect to the CNN and Lifetime.

Additional Info for reference -

Facts of the case:

1. Dana Wheeler, the new joinee in the organisation, will need support from her peers for any
new strategies she will want to present in front of the senior management.
2. TFC will be spending over $60 million in all national and affiliate advertising and promotion
and public relations. (2007) – $15 million more than they spent in 2006.
3. Reach of the channel – 80 million US households. (Total – 110 million households with TV in
US)
4. Avid viewers – women between 35 to 54 years of age
5. TFC believed in ‘something for everything’ and didn’t focus on any particular segmentation,
branding or positioning strategy.
6. Dana Wheeler – strong background in packaged consumer products and advertising industry
7. Urge to resist change – don’t want to break something that is not broken.
8. Revenue streams –
a. Advertising Sales
 MM1 - Assignment 13
Ashish Patel Roll No. - 190101033 Section -E
b. Cable-affiliate fees
9. Channels whose audiences were older or low income family commanded lower rates for
advertising. While, higher CPM would be paid for men of all ages and 18-34 age group.
10. TFC was positioned as a basic channel
11. For TFC the negotiated subscriber fee averaged $1.00 per subscriber per year.
12. TFC achieved virtually full penetration of available cable households and there was limited
opportunity to raise fees
13. Two levers to drive revenue growth was –
a. Increased viewership (ratings)
b. Increased advertising pricing
14. TFC was facing challenges in its attractiveness and consumer interest to cable affiliates
a. TFC rating – 3.8/5 (Consumer Interest)
b. CNN rating -4.3/5 (Consumer Interest)
c. Lifetime rating – 4.5/5 (Consumer Interest)
d. TFC rating – 4.1/5 (Awareness)
e. CNN rating -4.6/5 (Awareness)
f. Lifetime rating – 4.5/5 (Awareness)
15. According to wheeler – there was a need to improve consumer interest, awareness and
perceived value.
16. Four groups of viewers –
a. Fashionistas (smallest in size)
b. Planners & Shoppers
c. Situationalist
d. Basics

Strategies-
Wheeler concluded not to pursue additional male viewers. Instead, she felt, segmentation and
positioning should be targeted at women, particularly the premium 18-34 year old demographic.

1. To maintain broad appeal to a cross segment of Fashionistas, planners & shoppers and
Situationalist. Invest in this cross segment could deliver a rating boost up of 20% (i.e. 1.0 to
1.2 ) - Ad sales was forecasting a drop of 10% in CPM to $1.80 - This strategy will not change
audience mix so the competitive risk will not be eliminated
2. Focus more on Fashionistas – Strong segment – 18 to 34 age group demographic - This
represent 15% from total households - Dropping the rating 20% to 0.8 - Strengthen the value
of the audience to advertisers which will lead to an increase in the CPM to $3.50 - Investing
in new programming costing additional $15 million
3. Targeting two segments – The Fashionistas and Planners & Shoppers – Average rating would
go up by 20% to 1.2 – potential CPM would be $2.5 – Additional $20 million investment is
needed for programming to cater both the segments