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Calatrava Essay

1859 words - 8 pages

The Fashion Channel: Case Write-Up
Decision to Be Made
The management team for The Fashion Channel (TFC) must decide which customer
segment(s) or ―cluster‖ they should target in their new marketing strategy and how they should
position TFC to ultimately increase company revenue. When deciding their marketing strategy,
TFC must consider how they can increase their share of the market (ratings) versus the
increasingly competitive fashion programming on CNN and Lifetime, and if they can maintain or
increase TFC’s satisfaction level among the Large Multi-System Operators. According to Dana
Wheeler, senior vice president of marketing for TFC, ―the two key levers to drive revenue
...view middle of the document...

Advertising Revenue
The Fashion Channel also implemented their new marketing plan to bolster their
advertising revenue. According to the case study, advertisers would ―pay a premium CPM to
reach certain groups; in 2006, these were men of all ages and women aged 18-34.‖ Compared to
CNN and Lifetime, TFC is currently in an undesirable position in terms of consumer
demographics. CNN boasted the best percentage of the male audience at 45% (TFC – 39%)
while Lifetime captured the best percentage of the 18-34 female audience at 43% (TFC – 33%).
Consumer interest, awareness, and perceived value of The Fashion Channel could be indirectly
affecting their advertising revenue. According to an Alpha research study, TFC is below average
on many important categories. They received a rating of 3.8 for consumer interest in viewing, a
4.1 on awareness, and a 3.7 on perceived value. CNN and Lifetime outscored TFC by at least .4
points on each question. This could be another consequence of programming for a very specific
niche market. Regardless of their market, ―the ad buyers (are) most interested in buying ratings
and demographics,‖ so if The Fashion Channel wants to increase advertising revenue, they must
find a way to penetrate the certain premium CPM groups.2
Alternative Courses of Action
Broad-Based Marketing
Compared to the 2007 base numbers, the broad-based marketing scenario delivers almost
$40 million more in terms of net income ($94.9 million vs. $54.6 million). Also, compared to
the other two scenarios, the broad-based marketing scenario does not require an incremental
programming expense that costs the other two scenarios at least $15 million to implement. There
are women aged 18 to 34 in all four clusters, so TFC would be marketing to 100% of all 18 to 34
year-olds. Also, because TFC would be investing in a major marketing campaign across all
clusters, awareness and viewing of The Fashion Channel would go up.
Although the broad-based marketing scenario produces a higher net income than the 2007
base, the CPM is still $0.20 lower than the current CPM. This $0.20 decrease would take place
because TFC’s current target audience would not provide enough maintain the $1.00 CPM.
Also, because The Fashion Channel would not target a specific audience under this scenario,
TFC would run the risk that their competitors could continue to penetrate the premium CPM
groups—causing TFC’s CPM revenue to decrease even further. There would also be a lack of
differentiation from what The Fashion Channel’s positioning was before and after the
implementation of this scenario. TFC would still struggle to compete with Lifetime and CNN
without changing the programming offered by the channel.
“Fashionista” Segmentation
Compared to the 2007 base numbers, the fashionista segmentation scenario produces
almost $100 million more in terms of net income ($151.4 million vs. $54.6 million). The

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