Fashion Channel Case Study Essay Example

marketing options.

The text provides an overview of The Fashion Channel's marketing challenge and data analysis. In 1996, TFC was launched by two entrepreneurs, including current CEO Jared Thomas, for broadcasting fashion programming through cable television and satellite mediums (Stahl, 2007, p. 1-2). TFC is an exclusive niche network dedicated solely to fashion and entertainment and is widely available, reaching almost 80 million U.S. households subscribed to basic packages (Stahl, 2007, p. 2). TFC's projected revenues for 2006 are expected to be $310.6 million, with $230.6 million (74%) coming from ad-generated revenues and $80 million from cable affiliate fees (Stahl, 2007, pp. 1-3). From the beginning, TFC's marketing strategy has targeted a broad segment of viewers.

TFC's unique programming and strategy allowed them to become the leader in fashion television programming. However, without a protective barrier, other channels began copying TFC's concept and taking away market share, impacting their revenue projections (Kotler & Keller, 2009; Stahl, 2007). To counter this, Thomas realized that TFC needed to reevaluate and modernize their marketing scheme. Dana Wheeler was hired as senior vice president of marketing to develop a new segmentation and positioning strategy (Stahl, 2007).

According to Wheeler's analysis of data provided by GFE Associates using attitudinal clusters, there are three options for segmenting and positioning TFC (Kotler & Keller, 2009). These options along with their advantages and disadvantages are as follows (Stahl, 2007):

Option One: Same Segment but More Investment in Brand Awareness
By investing more revenue in marketing and advertising, TFC can increase awareness and viewership within their current mass-market segment.

Pros: The increase in viewership will continue to generate revenue streams.

Cons: The internal forecasts indicate that CPMs

are expected to decrease by at least 10% for the same mass-market audience. As a result, reaching more of the same audience type might reduce profits due to the decline in CPM rates. This could occur either if the rates remain unchanged and there is insufficient growth in viewers or if the rates drop.

Option Two: Targeting the Fashionistas segment is a potential strategy for TFC. This segment consists of 18-34 year old females who have a strong interest in fashion. Although this approach could lead to a nearly doubled CPM, there is a likelihood of a 20% decrease in overall ratings. The advantage is that advertisers will acknowledge the highly focused viewership and pay higher CPMs. On the other hand, the current audience will be affected by the programming changes. Additionally, implementing new programming will require a minimum budget of $15 million without any assurances that it will attract enough Fashionistas to offset the expenses and lost viewership.

If either the CPM or the viewer estimations decrease, this would have a devastating impact. Option Three: Targeting Fashionistas and Planners ; Shoppers, allows TFC to increase CPM rates and ratings revenue. According to Kotler ; Keller (2009, p. 138), some market leaders have increased profitability by selectively reducing market share in weaker areas. The pros of this option include increasing CPM and viewership, resulting in long-term revenues. However, there is a risk of older segments dropping off if new segments also leave. Therefore, it is recommended to choose Option Three.

Wheeler should advocate for targeting Fashionistas and Planners ; Shoppers as the best option for TFC to maintain its competitive advantage against market challengers and followers (Porter, 1998;

Kotler ; Keller, 2009, pp. 138-139). Although it may be more expensive in the short-term, it will provide long-term revenues and an opportunity for TFC to define its brand for the future (Welch, 2008). In conclusion, CNN and Lifetime are gaining market share from TFC through a frontal attack. TFC needs to decide whether to stick with its current strategy or change it now. There are several options available to TFC.

Considering the marketing challenge faced by TFC, evaluating their consumer and market data, and analyzing the advantages and disadvantages of TFC's marketing options, Wheeler will be able to have an informed and effective conversation with Thomas and TFC staff (Kotler & Keller, 2009; Porter, 1998; Stahl, 2007; Welch & Welch, 2005).