The Fashion Channel
TFC
1. After analyzing the proposed scenarios it is recommend TFC adopting Scenario-3: Focuses on both Fashionists and Shoppers/Planners segments.
2. The recommendation is based on the scenarios analysis and the decision matrix outcome. The main reason for this selection would be its superior projected net profit over the other scenarios (168.8M$,39% margin) as well as its source. For this approach, revenue increases from both viewership and CPM. A diversified revenue source reduces risk of meeting revenue projection and risk of losing cable distribution support due to ratings decrease. Another important aspect is that it’s a well balanced solution between two desired phenomena: differentiation from competitors and creating a loyal customer base which are less likely to shift to competitors programs. Targeting shows to a narrow (and profitable) segment of viewers would brand the network as a premium fashion provider, a channel that is focused only on delivering high quality and do not intends to satisfies all. A positive by product of this approach would be higher customer retention which has higher monetary value than the casual viewer (acquiring a new costumer is estimated to cost about 5 time more than retaining one). Note that although scenario-2 as well delivers these values it incurs higher risk due to its aggressive and narrow market segmentation. Finally, although the channel is still generating a healthy profit and therefore one would be reluctant to changes, this suggested graduate, less drastic change would help management to stand behind it from other business aspects such finance, accounting, operation and shareholder value.
|Criterion |Weight |Scenario-1 |Scenario-2 |Scenario-3 |
|Profitability |3 |2 |4 |5 |
|Ease to Implement
1. After analyzing the proposed scenarios it is recommend TFC adopting Scenario-3: Focuses on both Fashionists and Shoppers/Planners segments.
2. The recommendation is based on the scenarios analysis and the decision matrix outcome. The main reason for this selection would be its superior projected net profit over the other scenarios (168.8M$,39% margin) as well as its source. For this approach, revenue increases from both viewership and CPM. A diversified revenue source reduces risk of meeting revenue projection and risk of losing cable distribution support due to ratings decrease. Another important aspect is that it’s a well balanced solution between two desired phenomena: differentiation from competitors and creating a loyal customer base which are less likely to shift to competitors programs. Targeting shows to a narrow (and profitable) segment of viewers would brand the network as a premium fashion provider, a channel that is focused only on delivering high quality and do not intends to satisfies all. A positive by product of this approach would be higher customer retention which has higher monetary value than the casual viewer (acquiring a new costumer is estimated to cost about 5 time more than retaining one). Note that although scenario-2 as well delivers these values it incurs higher risk due to its aggressive and narrow market segmentation. Finally, although the channel is still generating a healthy profit and therefore one would be reluctant to changes, this suggested graduate, less drastic change would help management to stand behind it from other business aspects such finance, accounting, operation and shareholder value.
|Criterion |Weight |Scenario-1 |Scenario-2 |Scenario-3 |
|Profitability |3 |2 |4 |5 |
|Ease to Implement