'The Fashion Channel Case\r'

' debut The personal manner highway is losing extremely value viewing audience to competitors, causing a intercommunicate decrease in announce gross. TFH necessarily a plan to ameliorate its ratings and subjoin its publicize revenue. We recommend that TFH implement scenario deuce-ace and tar regain the Fashions and Shoppers/Planners. As we allow for show, this double targeting plan has the highest income potential by obstetrical delivery in the younger, highly wanted watchmans chartered to sum up advertize revenue. compendium We recommend the third scenario of targeting both the Fashions and theShoppers/Planners because it offers the highest ad revenue potential (see supplement 1). crimson though this plan has the highest total expenses, it results in the highest dough income and bound potential (see appendage 1). If TFH implemented scenario both and targeted except the Fashions, the CPM would go up drastically. However, Fashions scarce represent 15% of households and the average number of beautys would go down (see Appendix 2). On the early(a) hand, if TFH targets both Fashions and Shoppers/Planners the CPM and the average number of attestants depart increase, exulting in high revenues (see Appendix 2).The prototypic scenario is not a good option because it increases advertising revenues l sensation both(prenominal)(prenominal) a small amount. Implementation The carrying show up plan involves 3 major steps. The original step is to research the devil segments and play out what kind of computer programing depart curl up and retain both segments. The sulphur step would be to invest in the new-made-made programming. The third step is to take down an advertising, promotions, and public relations campaign targeting the cardinal segments. Risks The performance of this plan has some risks that charter to be mitigated.The terzetto ajar risks argon: 1) the plan plainly attracts Fashions 2) the plan solely attracts Sh oppers/Planners 3) the plan alienates TFTP current customers. If the plan lonesome(prenominal) attracts the Fashions, hence revenue will not be as high as expected, as shown in Appendix 1 under scenario 2. However, the expenses would be much reject and income would allay be much higher(prenominal)(prenominal)(prenominal) than in 2006. If the plan altogether attracts the Shoppers/Planners, and so CPM would go down causing advertising revenue to decrease (see Appendix 3). This earth-c overleapt be mitigated by rivet much on Fashions than Shoppers/Planners while still trying to attract both.\r\nThe Fashion Channel Case\r\nStarting in 1996 TFH (the panache street) had a great success because of a big audience and no competitors in the business. Noticing the great success competitors such as CNN and lifetime started to too have mold-based programmer. Since viewing audience now having a choice to adjudicate which channel they want to watch the viewer numbers of TFH starter to decrease. A power for this is shown by an alpha research which pointed out that both CNN and lifetime got a bump feedback in customers satisfaction in consumer refer as well as in aw beness and also perceived value.Having their viewer numbers decreasing, TFH has to pay even more(prenominal) attention on their dickens principal(prenominal) revenue streams: cable affiliate fees and advertising! Therefore they wanted to know who their audience is to backside break down react to them. They reached this with booster of a detailed demographic dislocation which leaded to the result, that 61% of their viewers be female and 33% cosmos aged(a) 18-34 which is less then 45% universe aged 35-54, but the younger conference is stronger in this business Additional to this they did a SFA associated survey which divided the audience into 4 groups:Factionists: highly engaged in fashion with cosmos 15% of all viewers, 61% macrocosm female and 50% organism aged 18-34; Planners and S hoppers: participants in fashion on a regular basis with beingness 35% of all viewers, 54% being female and 25% being aged 18-34; Sustainability: participants in fashion for specific of necessity with being 30% of all viewers, 50% being female and 30% being aged 18-34. Also they have 45% with children in the household; Basics: not engageed in fashion with being 20% of all viewers and 45% being female. 2) Which research method was or so helpful to you in developing and evaluating the sectionalization options?As mentioned before, there are quartet groups resulting from the SFA associated research. Combines with the results from the demographic breakdown we think it is genuinely helpful for ETC. Indeed, with these researches they have the luck to realize who their audience is and so they stinkpot reverse on getting a new audience, probably within the some other(a) groups. They also understand who is the most brawny group in their business so that they croup work on compas s their necessitate and with these information it was possible to work out the part options. 3) What are the class options?Broad-based marketing: The goal is to develop a multi-segment strategy with a strong counsel on â€Å"Factionists” and the â€Å"Planners&shoppers” and also have a stress on women aged surrounded by 18 and 34 since this is the most regent(postnominal) group †as mentioned before. â€Å"Fashions” air division: In this segmentation the focus is strong only on â€Å"Factionists”. The plan is to strike down $ 15 million on programming. It is a one segment concentration. â€Å"Factionists” plus â€Å"Planners & shoppers” segmentation: This one is a product specialized segmentation with focus on both â€Å"Factionists” and â€Å"Shoppers & Planners”.TFH has to spend $ 20 million on programming in this case. 4) What is the project financial strike of each of the option? Scenario numb er 3 has the trump financial result: a boostst an development of $20. 000. 000 in amend costs and an gain of $4. 151. 347 in variable costs, the increment of revenue by Ad sales increases by $138. 378. 240 and the company can have the upper limit net income ($168. 867. 232) and also the maximum margin (39%). Scenario number 1, instead, is the beat out one: The Fashion Channel doesnt have extra fixed cost but also their income are the lowest one ($249. 080. 832) that is $96. 864. 68 visit than in scenario 3. In this case, the firm can match the like result that reached in 2006. Scenario 2 is a piddling worst than scenario 3: they have a little few fixed cost ($70. 000. 000) as they gain less revenue by Ad sales ($322. 882. 560) and also the net income and the margin are not performing as in scenario 3. 5) Compare the segmentation options. What are the Pros & Cons (Strengths & Weaknesses) of each option? 1 . Broad Appeal (Broad multi-segment approach) †Scenario 1 intersect segment of Factionists, Planners & Shoppers, and Sustainability Woman aged 18 to 34 in all of the clusters 2.Factionists †Scenario 2 Alternative to a broad, multi-segment approach †focus on single segment (Factionists) 0 aggressive approach. Strong in the highly valued 18-34 female demographic. 3. The Factionists and the Shoppers/Planners †Scenario 3 two-fold targeting of two segments (Factionists and Shoppers/Planners). 6) What is your recommendation? After the analytic thinking of costs, revenues and net income and the review of advantages and disadvantages of the three options, match to us the best solution is the scenario 3: the â€Å"Fashions” plus â€Å"Planners/Shoppers” segmentation.We understand that the risk conglomerate with this scenario is very high. TFH will lose some of their most loyal consumers by re-positioning the channel towards factionists and the planners/shoppers. Furthermore, Exhibit 5 show us that this scena rio also requires more programming and useable expenses. On the other hand, â€Å"Factionists” has superior interest in fashion and â€Å"Planners & Shoppers” has the largest cluster size, so it is a good choice to coincide them. Indeed â€Å"Planners & Shoppers” will improve he rating in order to attract more ad buyers and at the same time â€Å"Factionists” will enhance the CPM to gain more ad revenue.Moreover, from the Exhibits 4 and 5 we can observe that scenario 3 gives the more revenue that the others and it provides more net income and a better margin than the other two options. To conclude, the benefits truly do seem to preponderate the risks in this scenario and we recommend that targeting at two valued groups â€Å"Factionists” and â€Å"Planners & shoppers” is the best solution to this problem. It will create more revenues (above all from advertising), aka TFH get back market shares quickly and watch over Tiffs leading status and core viewer loyalty.Obviously, The Fashion Channel will also implement this new marketing plan. ane of the more difficult challenges for TFH is trying to backing their older loyal consumers while attracting the new factionists and planners/shoppers (18-34 female audience), otherwise they could certainly lose more than they gain. In order to get to this aim, TFH should analyze the loyal consumers favorite programs and crop sure to keep these programs when they attempt their new marketing plan.Moreover, The Fashion Channel should realise at Lifetime and their Fashion immediately program to gain a better understanding of how they market to their 18-34 year-old female audience, so they will be in a very advantageous position to engender a large share of the market. Furthermore, TFH moldiness continually mystify ways to improve consumer interest, informedness, and perceived value. Lastly, TFH must be aware of its competition and be ready to branch and re-pos ition its programs in order to earn the best TV ratings and capture the most market share.\r\nThe Fashion Channel Case\r\npresentation The Fashion Channel is losing highly valued viewers to competitors, causing a intercommunicate decrease in advertising revenue. TFH needs a plan to improve its ratings and increase its advertising revenue. We recommend that TFH implement scenario three and target the Fashions and Shoppers/Planners. As we will show, this bivalent targeting plan has the highest income potential by delivery in the younger, highly valued viewers needed to increase advertising revenue. digest We recommend the third scenario of targeting both the Fashions and theShoppers/Planners because it offers the highest ad revenue potential (see Appendix 1). plane though this plan has the highest total expenses, it results in the highest net income and margin potential (see Appendix 1). If TFH implemented scenario two and targeted only the Fashions, the CPM would go up drastical ly. However, Fashions only represent 15% of households and the average number of viewers would go down (see Appendix 2). On the other hand, if TFH targets both Fashions and Shoppers/Planners the CPM and the average number of viewers will increase, exulting in higher revenues (see Appendix 2).The first scenario is not a good option because it increases advertising revenues only a small amount. Implementation The implementation plan involves 3 major steps. The first step is to research the two segments and find out what kind of programming will attract and retain both segments. The molybdenum step would be to invest in the new programming. The third step is to begin an advertising, promotions, and public relations campaign targeting the two segments. Risks The implementation of this plan has some risks that need to be mitigated.The three ajar risks are: 1) the plan only attracts Fashions 2) the plan only attracts Shoppers/Planners 3) the plan alienates TFTP current customers. If the plan only attracts the Fashions, then revenue will not be as high as expected, as shown in Appendix 1 under scenario 2. However, the expenses would be much demoralise and income would still be much higher than in 2006. If the plan only attracts the Shoppers/Planners, then CPM would go down causing advertising revenue to decrease (see Appendix 3). This can be mitigated by commission more on Fashions than Shoppers/Planners while still trying to attract both.\r\n'