Alternative Courses of Action( the fashion channel)
Alternative Courses of Action
Broad-Based Marketing
Pros:
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.
Cons:
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
Pros:
Compared to the 2007 base numbers, the fashionist segmentation scenario produces almost $100 million more in terms of net income ($151.4 million vs. $54.6 million). The fashionista segmentation scenario also improved TV ratings from 1.0% to 1.2%. Because this scenario targets a premium CPM group, TFC’s average CPM would increase from $2.00 to $3.50. Targeting the fashionista segment would strengthen the value of the audience to advertisers because 50% of fashionistas are females between the age of 18
Broad-Based Marketing
Pros:
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.
Cons:
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
Pros:
Compared to the 2007 base numbers, the fashionist segmentation scenario produces almost $100 million more in terms of net income ($151.4 million vs. $54.6 million). The fashionista segmentation scenario also improved TV ratings from 1.0% to 1.2%. Because this scenario targets a premium CPM group, TFC’s average CPM would increase from $2.00 to $3.50. Targeting the fashionista segment would strengthen the value of the audience to advertisers because 50% of fashionistas are females between the age of 18