Product - The Fashion Channel (TFC) Year 2006 Geography USA Industry Entertainment Media Characters

Dana Wheeler (Sr. Vice President, Marketing) Jared Thomas (Founder & CEO of TFC) Norm Frazier (Sr. Vice President, Advertising Sales)

TFC was a successful cable television started two entrepreneurs in 1996 Channel dedicated to Fashion only Operating 24 x 7 Main audience were women of 35-54 age group Tagline Fashion for Everyone Revenues for 2006 were forecasted at $310.6 Million out of which target was to earn $230 Million through Advertisement. TFC was very successful but lately regular networks began to copy its concept and market share of it, which as a result, had a negative effect on TFCs advertising revenue and affiliate fees.

CNN and Lifetime following footsteps of TFC and begun telecast of fashionrelated programs at achievable notable ratings

Parameters Time Period

All TV Viewers 24 x 7

TFC 24 x 7

Lifetime M-F, 9-11PM

CNN M-F, 8-9PM Sat-Sun, 1011PM 4.0 4.4M

Average Rating Average Households

NA 110M

1.0 1.1M

3.0 3.3M

Customer Satisfaction Parameters

Parameters Customer Interest in viewing
Awareness Perceived Value

TFC 3.8
4.1 3.7

Lifetime 4.5
4.5 4.4

CNN 4.3
4.6 4.1

TFCs average rating was 1.0 110 million TV households in USA i.e. 1,100,000 people watching at any given time. 6 minutes national ad time, each half hour i.e. 24 hours per day for a total of 2,016 minutes per week. CPM (cost per thousand) price than an advertiser would pay for an impression or moment of viewing. Networks were evaluated on their ability to deliver specific target groups
Older or had low family incomes command lower rates for advertising Premium CPM for certain group i.e. men for all ages and women aged 18-34

TFC Ad Sales team could achieve CPM pricing increasing 25% to 75%

June, 2006: TFC starts rethinking on the approach to marketing via. Building a modern brand strategy in order to Secure TFCs position as the market leader

STRENGTH - Dedicated Network for broadcasting fashion programs - 24x7 coverage of fashion - Accessible to all cable customer - Low fees of program

WEAKNESS - Low customer awareness and interest - Poor market research - No customer segmentation

OPPORTUNITY - Proper segmentation can increase viewership - Target specific clusters will increase advertising revenue - Identify proper promotion strategy

THREAT - Increasing competition - Loss of market share - Loss of advertising revenue - Reducing brand awareness

Gender Male Female Age Group 18-34 35-54 55-74 >74

All TV Viewers 49% 51% All TV Viewers 30% 41% 21% 08%

TFC 39% 61% TFC 33% 45% 20% 02%

Lifetime 37% 63% Lifetime 43% 42% 14% 01%

CNN 45 % 55% CNN 27% 40% 26% 02%

Relevant Segments Female, 18-34, annual income over $100K Female, 35-54, annual income over $100K Male, 18-34, annual income over $1000K Male, 35-54, annual income over $1000K

Cluster

Involvement in Fashion

Size of Cluster (%HH)

Index

Demographic Highlights

Attitude Drivers

Fashionist as

Highly Engage 15% in fashion

140

Female, 60% Income > $ 100K, 30% 18-34, 50%

Female, 53% 18-34, 25%

Anticipate trends / Stay up to date / Think a lot about fashion / Develop fashion expertise to share
Stay up to date / Enjoy shopping / Fashion is practical / Interested in value Enjoy shopping for specific needs / Think about fashion for specific situations Do not enjoy shopping / Do not spend much time thinking about what to wear/ Interested in value

Planners & Shoppers Situationa lists

Participate in fashion on regular basis Participate in fashion for specific needs Disengaged

35%

110

30%

105

Female, 50% Children in HH, 45% 18-34, 30% Female, 45% Male, 55%

Basics

20%

50

Male interest occurred in Basics so discarded Left over Segmentations: Female, 18-34, annual income over $100K Female, 35-54, annual income over $100K

35-54 already loyal to TFC so target 18-34 age group females i.e. targeted first level segmentation: Female, 18-34, annual income over $100K

Management team of TFC has to decide

Which customer segment(s)/ cluster they should target in the new marketing strategy? How should they position TFC to ultimately increase company revenue?

Key drivers for revenue growth: 1. Increased viewership ratings 2. Increased advertising pricing

Therefore, TFC must implement market strategy that increases TV ratings and advertising revenue

Broad based marketing:

Single-segment approach: Fashionista Segmentation only

Broad appeal to cross segments Fashionistas, Planners/Shoppers and Situationalists Delivery ratings boost of 20% (1.0 to 1.2) Ad Sales forecasting a 10% drop in CPM to $1.80 Segment was strong in high valued 18-34 female group Smallest group of only 15% households (Drop in veiwership) Deliver a rating of 0.8 (1.0 to 0.8) Ad Sales projection $3.50 CPM (audience stronger in the younger, femaleoriented Fashionista segment) Additional $15million for marketing program Ratings over time to 1.2 Potential CPM of $2.50 Additional $20 million for marketing program

Dual targeting approach - Fashionista plus Planners & Shoppers

Target two segments viz. Fashionistas and Planners & Shoppers that have large concentrations of the 18-34 female demographics Largest financial return of all the scenarios $168, 867,232 Approx. 17 million more revenue and 2% greater margin than Scenario2, the next closest option Not as risky as targeting one segment Unlikely to harm relationship with cable providers

TFC should position their marketing plan towards Fashionistas plus planners/shoppers. Customers preference of both Fashioistas and Planners/Shoppers segments very similar: Position as a fashion channel but same time introduce point of difference for the mentioned customer preference, telecast programs for 18-34 age group women
Love to shop Need fashion information on newest trends Cross promotional events with stores in large metropolitan areas. Premier products with 24 hours per day, 7 days per week access Stay up to date Enjoy shopping