The Fashion Channel HBS Case Notes

Introduction The protagonist of this case is Dana Wheeler who is the senior vice president of trade for TFH She was look into preparing a new Segmentation and Positioning Strategy If her boss liked what he heard then they would move forward with a 60 one thousand million dollar MIMIC campaign utilizing national advertising, promotion, and public relations.This was an increase of 15 million dollars from last year. Background TFH was a triple-crown cable network that was the further one who broadcasted up-to- date news about fashion 24 hours a day, 7 days a week It was founded in 1996 It has had consistent and constant step-up since the beginning, revenue was projected to grow to 310 million dollars in 2006 marking another steady year of growth.The roadway was one of the most widely available respite networks reaching 80 million US house conciliates (this number represents the number of mint who had TFH in their parcel of land not those watching it) Women amidst 34 and 54 o ld mature were its most avid viewer according to its annual demographic survey Beyond basic demographics the network had no other information on its viewing consultation Nor did it attempt to market to any viewer segments in particular Early on the network had chosen a something for everyone type of strategy in its schedule and advertising TFH has clearly grown quickly despite it lack of bunsed marketing, further at the beginning of 2006 TFH had realized that other networks were taking note of its success several(prenominal) of its biggest competitors became Lifetime and CNN who had added fashion programming to their lineup This is what prompted Techs CEO to want to change up TFH marketing and be more strategic with their marketing, this is why they hired Dana who bulky experience with marketing packaged consumer goods as well as broad experience in advertising.Techs CEO and other executives felt some urge to disapprove change and didnt want to fix what wasnt broken Wheele rs Plans Frazier (senior up of ad gross sales) had warned that TFH would need to drop the price of a unit of advertising by 10 % if changes werent make in Techs performance He mentioned that CNN and Lifetimes fashion shows were achieving notable ratings (EXHIBIT 1) Frazier was a great salesman and was Justifiably worried about sales Wheeler knew that in order to hold or increase the price it would be crucial to attract a critical mass of viewers who were interested in the networks content and were attractive to advertisers The severalize would be targeting the right viewers and offering advertiser an attractive mix of viewers when comp ared to their competitors BUT if she changed the networks offering in a way that disappointed besides many consumers it could risk losing its distribution support Her plan was to build a strategy for segmentation and use it as a base to employ in solely marketing tools at her disposal, traditional/internet ads, PR and promotions to reach targeted consumers Everyone felt that advertising was TFH primary growth opportunity. Tiffs Advertising Revenue Model TFH was on target to generate 230. Million dollars in 2006 from advertising The advertising business model was built on attracting a mix of male and female viewers on a regular basis think something for everyone strategy Tuft average rating was 1. 0 with 110 million households or 1. 1 million people people watching at any prone time.The ad sales team sold access to viewers through 30 to 60 certify spots to a variety of advertisers which included automobile manufacturers, clothes companies, and cosmetic companies There were usually 6 minutes of advertising per 30 minutes of programming (20 percent) 24 hours per day for a total of 2016 minutes per week In 2006 industry data showed that advertisers spent 20 billion dollars on advertising in cable industry, however there were over a hundred networks competing for these dollars which made competition fierce. TFH was the only d edicated fashion network If CNN and Lifetime are successful more channels may copy them creating more competition for TFH The network based ad unit prices on several factors The number of viewers (ratings) The audience characteristics (demographics and lifestyle)Both of the are hurting ad sales and hurting Techs CPM TFH was facing additional competitive challenges in its attractiveness to cable affiliates. On a scale of 1 to 5 TFH achieved a 3. 8 whereas fashion programming on CNN scored a 4. 3 while Lifetime scored a 4. 5 On awareness TFH scored 4. 1 CNN 4. 6 and Lifetime 4. 5 On perceived value TFH scored 3. 7 CNN 4. 1 and Lifetime 4. Memos use the aforementioned data to determine Affiliate Fees and which package to offer TFH in. If TFH continues to underperformed it may be offered in less appealing packages making it seen in even fewer households, ruining its prospects of revenue growth or even survival.The Data materially indicates that change in programming need to happen so t hat TFH foundation increase consumer interest, awareness, and perceived value This change could result in upsetting some of the existing loyal viewers The Management team had been with TFH for years and experienced large amount of their growth arguing safe marketing strategies where Wheeler is asking them to take a risk. Attitudinal Research Findings The Following Data can be found in Exhibit 2 and Exhibit 3 There are four unique groups of viewers Factionists Planners & Shoppers Sustainability Basics While the segments varied in size, Wheeler quickly noticed that the smallest -The Factionists- had a high gradation of interest in fashion Most of the male interest occurred in the Basics cluster- the least seeming to be engaged with TFH content. Factionists, Planners, and Sustainability all had cluster of women between the ages 18 to 34, the premium demographic.By investing in a major marketing/advertising campaign it would be reasonable to expect that awareness and viewing of the c hannel would go up This could deliver a ratings boost of 20% and would take the rating from 1. 0 to 1. 2 If the current audience mix stayed the same, ad sales were predicting a ten percent drop to $1. 80 Wheelers Preferred Strategy Targeting Factionists, Shoppers/Planners, and Situational All segments mentioned have clusters of the desired age group but both Planners and Situational are made up of older women their existing audience and they would all be targeted It is likely to assume that ratings would increase from 1. 0 to 1. No clear data is given about CPM No clear data is given about the increase in cost of programming Alternative Strategies Focusing on Factionists This segment was strong in the highly valued 18-34 female demographic It was smaller that other segments representPrimarily targeting Men Pursue a desirable demographic as men of all ages are a premium demographic No data on ratings No data on CPM No data on Programming costs, however it would be likely to assume th at costs would pike as all current programming is geared to slightly older women (their current primary demographic) They would likely and very quickly lose all of their current audience due to shift in programming for a demographic that they are unsure they can even secure. High short-term risk as all current audience will be lost and could result in ratings loss and be taken off the basic cable package Long-term if this strategy is successful, men could be a larger audience than women as more age groups are desired by advertisers. This could result in greater affiliate fees and ad sales.