Group 8 Section C

Overview
The Fashion Channel was a successful cable TV network and the only network dedicated solely
to fashion, with up-to-date and entertaining features and information broadcast 24 hours per day,
7 days per week. Total revenues for 2006 were forecast at $310.6 million. TFC major revenue
streams from advertising sales and from cable affiliate fees.
Customer-Driven Marketing Strategy
Segmentation: GFE Associates has divided the market of TFC into four segments based on age,
gender, income and lifestyle and named them as Fashionistas, Planners and Shoppers,
Situationalists and Basics. Out of total 110 million household television viewers in US, TFC has
a share of 1% i.e., 1.1 million household viewers in which 15% share was of Fashionistas, 35%
of Planners & Shoppers, 30% of Situationalists and 20% of Basics.
Targeting: The channel was one of the most widely available niche networks and their
customers are mainly fashion enthusiasts so their marketing strategy should be of concentrated
marketing (Niche Marketing) as there all the content revolves around fashion trends and fashion
news. Among all the market segmentation, Fashionistas are the most profitable audience for TFC
and among the total television viewers women with age group 18-34 are the most profitable
customers for TFC so their main focus should be to target these customers as they give more
revenue to the company.
Differentiator: The major advantage of TFC which differentiates it from other competitors is
that TFC operates 24*7 while their major competitors such as Lifestyle and CNN operates for
particular time slots like Lifestyle operates from 9-11pm Monday to Friday while CNN operates
from 8-9pm and 10-11pm for Monday to Friday and Saturday to Sunday respectively. To
differentiate their value for their target audience they should create more women-specific
programs and also include celebrity focus content like CNN programs to attract more younger
audiences.
Positioning: With current scenario, TFC have 30% margin and with the expected market, it is
evident that their margin will fall to 19% in next year as their product rating is less than its
competitors. According to Alpha Research, on a scale of 1 to 5 (5 is highest score) TFC scored
3.8 rating on consumer interest 4.1 on awareness and 3.7 on perceived value while their major
competitors Lifetime has scored 4.5, 4.5, 4.4 and CNN has scored 4.3, 4.6 and 4.1 respectively
on these parameters. So, the value of TFC is decreasing and if they didn’t change their marketing
strategies then their competitors will soon overtake them in the market.
Conclusion: To increase their revenue we have to focus on scenario 3 in which we will target
Fashionistas and Planners & Shoppers which constitutes around 50% of their existing market
share. With this their advertisement CPM will increase to 2.5 and rating will also increase to 1.2
hence, considering all other factors of increasing programming cost by $20 million, the net
revenue will come around $170 million and their margin will be of 39.4%.