MARKETING I The Fashion Channel

Section D Group 01
Chitralekha Sumbrui Udani Chintan Sameer Garg Saladi V KK Anoop Ravi Kumar

OBJECTIVE

Revisit the approach to pitch TFC considering new competitive threats Target the right customers, interested in networks content and are also attractive to its Cable affiliates. Maintain the overall audience ratings with the cable consumers and distribution networks Increase viewership and advertising pricing and hence the revenue Improve ratings on customer interest, awareness and perceived value

SITUATION ANALYSIS
Consumer Behavior Competition Analysis Analysis
There is a strong customer interest in staying up to date on latest fashion trends This interest is more for parties and special occasions and less for formal wears There is a high interest in special TV programs for fashion and Value Shopping. TFC being a dedicated fashion channel, can easily address these needs through its program and information content ith fashion specific programming blocks and high ratings, Lifetime and CNN has posed a significant challenge

Advertiser And Distributor Analysis

ustomers in the age group 18-34 are perceived by advertisers as the premium segments whereas TFCs most avid viewers were women in age group 3554.

ifetime is the market leader in premium 1834 age-group and CNN ustomer satisfaction is delivering some ratings are carefully great numbers on men. monitored by distributors. ompetitors command a far higher rating than FC needs to maintain TFC on consumer satisfaction level with interest, awareness viewers, else it risks and perceived value. being dropped and

COMPARATIVE ANALYSIS OF 3 SCENARIOS

Pros Scenario 1
80% target population is covered No significant change in offerings and hence less risk of disappointing the subscribers and losing the distribution support

Cons
Decrease in margin from .30.2% to 28.7% Multi Cluster strategy doesnt address the need for change in audience mix that is attractive to advertisers 10% drop in CPM from $2 to $1.8 Risk of increased competitor penetration in premium segments Target customer base reduces to just 15% of the market of TV viewers Risk of losing out on distributor support due to change in programming content

Scenario 2

A specific target segment very attractive to advertisers Segment constitutes a high percentage of premium18-34 age group and high income customers Opportunities for increased customer satisfaction through customization of programming A high CPM of $3.5 and a expected margin of 37.5% Target audience covers 50% of the market and is very attractive to advertisers Target segments have a high interest in fashion Increase in CPM from $2 to $2.5 Highest expected margin among the 3 scenarios at 39.5%

Scenario 3

Reduced focus on other 50% of the market Incremental programming expense Risk of losing out on distributor support due to change in programming content

AD REVENUE CALCULATOR
2006 Actual TV HH Average Rating Average viewers Average CPM Average Revenue / Ad Minute Ad Minutes / Week Weeks / Year Ad Revenue / Per Year Incremental Programming Expense
110,000,000 0.01 1,100 2 2,200 2016 52 230,630,400 0

2007 Base
110,000,000 0.01 1,100 1.8 1,980 2016 52 207,567,360 0

Scenario 1
110,000,000 0.012 1,320 1.8 2,376 2016 52 249,080,832 0

Scenario 2
110,000,000

Scenario 3
110,000,000

0.008 880 3.5 3,080 2016 52 322,882,560 15,000,000

0.012 1,320 2.5 3,300 2016 52 345,945,600 20,000,000

TFC ESTIMATED FINANCIALS FOR 2006 AND 2007

2006 Actual Ad Sales Affiliate Fees Total Revenue Expenses Cost of operations Cost of Programming Ad Sales Commissions Marketing and Advertising SGA Total Expense Net Income Margin
70,000,000 55,000,000 6,918,912 45,000,000 72,100,000 55,000,000 6,227,021 60,000,000 72,100,000 55,000,000 7,472,425 60,000,000 72,100,000 72,100,000 70,000,000 75,000,000 9,686,477 10,378,368 60,000,000 60,000,000 40,000,000 216,918,912 93,711,488 30.2 41,200,000 234,527,021 54,640,339 18.9 41,200,000 235,772,425 94,908,407 28.7 41,200,000 41,200,000 252,986,477 258,678,368 151,496,083 168,867,232 37.5 39.5 230,630,400 80,000,000 310,630,400

2007 Base
207,567,360 81,600,000 289,167,360

Scenario 1
249,080,832 81,600,000 330,680,832

Scenario 2
322,882,560

Scenario 3
345,945,600

81,600,000 81,600,000 404,482,560 427,545,600

RECOMMENDATIONS
TFC should go with Scenario 3 and target Fashionistas and Shoppers / Planners as its desired segments. This way it will be able to target 50% of the market. This scenario also offers highest potential margin TFC should also market to men in the premium age group 18-34 and not only women. Competitor CNN has already made delivered some good numbers on men. Programming content should be modified to appeal to target customers without alienating the distributor support. Innovative marketing solutions should be designed to convey the new brand positioning without alienating the existing customer base Set up a feedback mechanism to get customer approval ratings on various parameters and incorporate this information into further planning