Case Study: The Fashion Channel
The Fashion Channel (“TFC”) was founded in 1996. It was the only channel dedicated solely to fashion and was broadcasting 24 hours a day, 7 days a week. TFC was enjoying its success since the beginning. As other companies saw TFC’s success, they were copying the concept and stealing viewers from TFC. By June of 2006, Jared Thomas, TFC’s CEO, determined that TFC had to develop new marketing and brand-building programs to further its growth (Stahl, 2007, p. 2).
Key Strategic Issues TFC had to make drastic changes to its marketing programs due to the lack of detailed segmentation, the age of TFC’s avid viewers and the lower ratings. TFC’s marketing messages were to appeal to a broad group since it had grown without articulating …show more content…
By focusing on a cross segment of Fashionistas, Planners & Shoppers and Situationalists, TFC can raise ratings from 1.0-1.2 (Stahl, 2007, p.6). Yet, it would decrease CPM by 10% dropping from $2.0 to $1.8 (Stahl, 2007, p.6). Moreover, there was the risk that competitors would attract the premium segments and driving TFC’s price down (Stahl, 2007, p.7). The second alternative would be marketing the Fashionistas in which 50% are women aged 18-34. TFC may increase its advertising prices by targeting the Fashionistas since advertisers are willing to pay a premium CPM to reach women aged 18-34 (Stahl, 2007, p.4). The projection of CPM for this group of audience was $3.50 which was higher than $2.0. However, it would deliver a lower rating of 0.8. Moreover, it only represented 15% of households and required additional spending of $15 million (Stahl, 2007, p.7). The third alternative would be marketing to both the Fashionistas and the Shoppers/Planners group. By marketing these two-segments, TFC can improve ratings from 1.0 to 1.2 and CPM from $1.0 to $2.5. Nevertheless, TFC had to spend an additional $20 million on programming (Stahl, 2007,