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Fashion Channel Review

Based on the above qualitative factors, we recommend a strategy that targets both the Fashionistas and the Shoppers/Planners segments.   Although adopting a Fashionista-only strategy would allow TFC to charge a higher CPM of $3.50 and increase total revenue, viewership would decline.   TFC might also risk affiliate-support with programming changes that could impact customer satisfaction negatively.   In addition, it would be difficult for TFC to penetrate an already saturated market consisting of females in the 18-34 age groups, especially in view of fierce competition from CNN and Lifetime.   Finally, management may well view the adoption of a Fashionista-only strategy as too disruptive of their current marketing and programming operations.   They might work to resist changes altogether, making implementation problematic.

With regard to the broad-appeal approach, the clear advantage of this strategy is a 20% increase in viewership.   On the downside, there is no clear opportunity for sustainable viewership growth.   50% of this broader audience mix is either disengaged altogether or only participates in fashion for specific purposes.   Furthermore, TFC would need to drop its price for a unit of advertising i.e. CPM by 10% if it decides to adopt this strategy.

In contrast, targeting the Fashionistas and Shoppers/Planners segments would enable TFC to charge a premium CPM of $2.50 (which is 25% higher than the current rate), since both segments comprise a fairly large proportion of the highly valued 18-34 female demographic.   In addition, this strategy also ensures that TFC doesn’t “throw all its eggs into one basket” – it allows TFC to target a broader reach of viewers than with adopting a Fashionistas-only strategy, yet it limits this reach to consumers who are either highly engaged in fashion or who participate in fashion on a regular basis.   Furthermore, this approach would deliver a rating boost of 20% over time, which is crucial to securing long-term distribution...