Case Analysis – Fashion Channel
Without this information TFC is unable to compete effectively against other networks who do know the target audience and their attributes and trends. If TFC is unable to maintain or increase its overall satisfaction ratings, they might face the possibility of being dropped by a network and lose a second source of revenue, affiliate fees.
The SWOT analysis also reveals another weakness, “fickleness. ” Fickleness of cable and satellite customers is based on the low brand loyalty and high churn rates.
In order to reduce customer defection to competitors TFC must develop brand loyalty and not only attract new customers but retain those that it already possesses. The opportunity facing TFC is the fact that it is in a position to address its market position. Management has given Dana an opportunity to adjust the corporate marketing strategy; this is not always the case. Dana realizes that in order to capitalize on this opportunity she must devise a strategy that increases viewership and advertising price premiums.
As Dana wrote on her legal pad, she must “deliver quality audiences, as demanded by advertisers. ” 2. Consumer and Market Data: In preparation for the renewed strategy, Dana and the TFC executives should pay carefully attention to the Viewer Demographics and Competitor Comparison data provided in Exhibit 1 of the case. Specifically TFC should take note of the make up of the viewers and the wide disparity in the average ratings. In terms of ratings, TFC currently achieves only a rating of only 1.
0 compared to Lifetime’s 3. 0 and CNN’s 4. 0.
And as far as the demographics of the viewers are concerned, Dana and TFC should pay close attention to females in the age group of 18-34 in particular. As sated in the case advertisers are willing to pay a premium CPM to reach these groups.
Dana will need to devise a strategy that significantly increases its viewership in these key demographics while balancing the overall ratings of the channel. Dana should be particularly concerned with Exhibit 2 – GFE Associates: National Consumer Survey. TFC, in order to demand top dollar from advertisers and increase its ratings must be known as a market leader and expert in the fashion world.
As Exhibit 2 shows, this is not quite the case as of yet; when consumers were asked if “TFC is the best place on television for fashion information” only 9% – Strongly agree, 21% – Agree and 28% – Somewhat agree. The relatively low percentage of those that strongly agree could be as a result of low brand awareness or low customer satisfaction with the current TFC programs. Dana might consider employing a strategy that can increase the percentage in those that “Strongly agree” while decreasing those that percentage in the “Disagree.
Reviewing Exhibit 3, we see that TFC enjoys an above average viewer index in both the Fashionistas and Planners & Shoppers clusters, both of which consist primarily of females aged 18–34. It would be wise to focus on these two groups since both are both fashion-centric and a key demographic which advertisers are willing to pay premium CPM. 3. Advantages and Disadvantages Proposed Segmentation scenarios: As a result of Dana’s work she developed three segmentation scenarios, which she would soon be presenting to TFC senior management for their evaluation and ultimately their direction regarding which strategy to pursue.
The first of the three scenarios is a broad-based segmentation strategy, this approach essentially maintains TFC’s current broad appeal to a cross segment of the fashionistas, planners & shoppers, and situationalists.
This scenario requires a focused effort on increased marketing and advertising to increase the awareness of the channel and their programming, thus increasing the ratings. Estimates show that ratings could climb to 1. 2 from the baseline 1. 0 currently seen at TFC.
Unfortunately, this approach does not address the decreasing CPM since it did not address the make up of the viewer and thus would not command an increase in rates from advertisers. In fact, the CPM is forecasted to decrease if the audience mix remains the same.
The second approach is an attempt to maximize CPM. By targeting the Fashionistas, a group that contains the largest percent of 18-34 year olds, the highest percentage of females, and generally makes up a large percentage of the optimal fashion audience, TFC projects a $3. 0 CPM. However, focusing on Fashionistas is a form of isolationism since the Fashionista audience is the smallest cluster (%HH), the result of which is estimated to be a decrease in viewership (ratings), down to 0. 8 from the current 1.
0. This approach will require a revision to the programming offered currently by TFC; it is estimated that this will cost $15 million. The third approach is a balanced approach; this scenario offers a two segment approach – focusing on fashionistas as well as the planners and shoppers.
By adding the planners and shoppers segment to the fashionista segment TFC is clearly attempting to balance the small size of the Fashionista cluster with the largest cluster, planners and shoppers. The result of this approach is an increase in viewership (ratings) over the fashionista scenario, inline with the 1. 2 rating estimated with the multi-segment scenario, while simultaneously achieving a higher CPM at $2.
50, slightly lower than the second scenario but an increase over the first scenario. This data is summarized in table 3-1 below.