The Fashion Channel

Stakeholder:

 Dana Wheeler –
o Senior VP of Marketing at TFC (Looking forward to the new segmentation and
positioning strategy which she had proposed. It was imp for her because it was her first
presentation to senior leadership after joining TFC, and she wanted to gain support from
colleague)
o Wheeler had a strong background in marketing for packaged consumer products as well
as broad experience in the advertising industry
 Channel:
 CEO: Jarred Thomas – focused more on broadcasting the channel to a broader mass, not specific
segment ‘ “Fashion for everyone”
 Norm Frazier:
o senior vice president of Advertising Sales
o Frazier was a high-energy salesman who had personally built the strong ad sales
performance of the channel
 Company:
o Cable TV network – only network solely dedicated to fashion
o Up-do date and entertaining features, 24/7
o Widely available niche network
o Revenue Source: Adv Sales, Cable affiliated fees
 Customers:
o Women between 35 and 54 years
 Competitors:
o Norm Frazier : He mentioned that both Lifetime and CNN had launched fashion-specific
programming blocks that were achieving notable ratings

Problem:

 Initially, till 2005, TFC was growing quickly without any specific segmentation/targeting
 The network realized that other networks were taking note of its success and beginning to add
fashion-related programming to their line-ups
 Competition provided choices to viewers and advertisers, hence CEO should reconsider the
positioning strategy
 CEO: he and some of the other members of the leadership team felt an urge to resist change.
The network had been highly successful to date and no one wanted to “break something that
isn’t broken
 Norm Frazier :TFC might need to drop the price for a unit of advertising next year by 10% or
more if the network did not make some changes in its performance
 the network needed to maintain its overall audience ratings with the cable consumers and the
cable affiliate distribution network. If the network changed its offerings in a way that
disappointed too many cable subscribers, it could risk losing its distribution support
 The strong fashion programming blocks on Lifetime and CNN represented a double-edged
competitive challenge
  Wheeler knew that the cable operators and affiliates carefully monitored customer satisfaction
with network offerings and would threaten to drop unpopular channels
 Lifetime is taking away a lot of ad buys from me because they’re attracting younger female
demographics. CNN is starting to deliver some great numbers on men. Both of these segments
can be sold for a premium CPM
 The study showed that TFC was facing additional competitive challenges in its attractiveness to
cable affiliates
What was the next steps:
 increase spend in advertising, hire marketer to develop brand-building and marketing programs
 in order to hold or increase price it would be crucial to attract a critical mass of viewers who
were interested in the network’s content and were also attractive to advertisers. RIGHT
SEGMENTATION AND TARGETING
 offering advertisers an attractive mix of viewers
 build a strategy for segmentation, and use it as a base to employ all of the marketing tools—
traditional and internet advertising, public relations and promotions—to reach the target
consumers with integrated positioning messages
 Advertisers: in recent years, the advertising buying process had become very sophisticated, with
many buying agencies and clients using combinations of surveys and “optimizer” programs to
analyze the demographic and psychographic characteristics of audience groups and then
establish pricing parameters that fit the audiences various networks delivered. The output of
these programs would be a recommended advertising placement portfolio for a specific product
campaign
 As far as cable affiliate revenue went, there wasn’t much to be done, she thought. The network
had already achieved virtually full penetration of available cable households and there was
limited opportunity to raise fees
 Increase Revenue: e (1) increased viewership (ratings), and (2) increased advertising pricing.
 It’s likely that there‘s a core group willing to become very loyal to our network. These viewers
have an emotional connection to TFC. We can find them and market to them so that we have
the building blocks to create the brand loyalty that is hard for a competitor to take away
 Thomas had agreed, but confessed to being worried about viewers’ fickleness

Qualitative Analysis:

 2007: Spend $60M in national and affiliate advertising, promotions

 2006: $45M spend in advertising
 Company:
o founded in 1996
o Revenue and profit growth – above industry avg since start. Revenue for 2006 -
$310.6M
o Reach of 80M US households
o Adv Model: $230.6M
o Cable Affiliate fees: $80M
 Revenue Models:
o Adv Model:
 TFC was on target to generate $230.6 million in 2006 from advertising
  “ratings” (the percentage of television households watching on average during a
measured viewing period.)
 TFC’s average rating was 1.0
 With 110 million television households in the United States, this meant that on
average 1,100,000 people were watching at any point in time.
 30-60 sec spot sold to advertsiers (clothing, cosmetics, automobiles)
 0.5 hr program had 6 minutes ad, 7 days: 2016 minutes of adv
 Advertisers spend 20Bn buying spot in 2006
 TFC had competition in two categories of adv buyers: Had fashion programming:
Adv interested in buying spot related to ratings and demo, and other where adv
buys spot related to programming context
o Pricing of Adv Model:
 The network based ad unit prices on several factor
 number of viewers (ratings)
 the audience’s characteristics (age, demographics, and lifestyle)
 general competitive trends
 Prices were expressed as CPM (cost per thousand), which represented the price
that an advertiser would pay for an “impression,” or moment of viewing
 How to increase price:
 Generally, networks whose audiences were older or had low family
incomes commanded lower rates for advertising. Advertisers would pay
a premium CPM to reach certain other groups;
 in 2006, these were men of all ages and women aged 18-34. By
increasing the ratings in highly valued demographic groups, the TFC Ad
Sales team could achieve CPM pricing increases from 25% to 75%.
 By attracting a large number of highly valued viewers, the network had
the opportunity to substantially grow its advertising revenues
o Cable Affiliate Fees:
 Most U.S. households subscribed to cable television through local affiliates of a
large cable multi-system operator (nationally, Comcast, Time Warner,
Cablevision, and Cox were the largest)
 Consumers paid a monthly fee for a basic lineup of channels and incremental
fees for premium channels and on-demand programming
 TFC was positioned as a basic channel, so most consumers received it
automatically when they signed up for basic cable service
 MSO signs contract of multiple channels: (THC is channel here)
 TFC would get $1 per subscriber form the operator
o Ratings:
 on consumer interest in viewing , TFC had achieved a 3.8 rating CNN had scored
4.3 and Lifetime a 4.5
 On awareness, TFC had scored 4.1 while CNN scored 4.6 and Lifetime a 4.5
 On perceived value TFC was at 3.7, CNN 4.1 and Lifetime 4.4
o Research:
 Attitides towards fashion and TFC, 100 questions
 Segment the customers
 Profile
 Option 2 Fashionistas:
o Smallest,
o high degree of interest in fashion,
o This segment was strong in the highly valued 18-34 female
demographic,
o representing only 15% of households
o Negative: targeting them might lead to a drop in viewers
o Positive: strengthen the value of the audience to advertisers
o Wheeler estimated that this strategy could deliver a rating of
0.8
o Ad Sales had given her a projection of a $3.50 CPM for an
audience stronger in the younger, female-oriented Fashionista
segment.
o Invest in additional programming: $15M
 Planners & Shoppers
 Situationalists
 Basics: Most of the male interest occurred, —the least likely to be
engaged with TFC content. Wheeler had already concluded that it would
be unwise to pursue additional male viewers only
 Option 1 (Broad Multi Segment Approach)
 she felt, TFC segmentation and positioning should be targeted at
women, particularly the premium 18-to-34 year-old demographic
 POsiive: reasonable to expect that awareness and viewing of the
channel would go up and could, over time, deliver a ratings boost of
20% (from the current 1.0 to 1.2).
 Negative: Ad Sales was forecasting a 10% drop in CPM to $1.80 if the
current audience mix stayed the same
 Option 3: targeted two segments—the Fashionistas and the Shoppers/Planners
 dual targeting would drive average ratings over time to 1.2 with a
potential CPM of $2.50
 Additional spending of $20M
