According to the information provided in the case study, the main problem that TFC faces is the rising competition. Despite the fact that TFC has managed to maintain its position as the market leader due to its initial approach, which included supplying the audience with up-to-date fashion news, features, and information via an on-going 24/7 broadcast, its profitability is now threatened by the rise of new competitors who started providing similar content (Stahl 1-2). The TFC’s vulnerability to this threat is justified by a variety of factors, including the lack of audience-specific approach and relatively low revenues from CPM and advertising.
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TFC’s biggest competitors are CNN and Lifetime, which are both well-established channels with high ratings that have recently introduced fashion-related programs. For instance, CNN’s Fashion Today broadcast has an average rating of 4% and reaches 4.4 million households (Stahl 8). Lifetime, on the other hand, has a lower average rating of 3% with a coverage of 3.3 million households; nevertheless, its values are still higher than TFC’s, which has a 1% rating with a coverage of 1 million households (Stahl 8). There are also significant differences regarding the audience of the three channels: for instance, Lifetime has the highest population of younger viewers aged between 18 and 34 (Stahl 8). CNN, on the other hand, has a higher proportion of male viewers (Stahl 8). This is important as both young and male viewers are considered to be the premium audience and can help the channel to generate more revenues from advertising: “Advertisers would pay a premium CPM to reach certain other groups; in 2006, these were men of all ages and women aged 18-34” (Stahl 4). The channels also differ in the content they provide: out of all three, CNN is the only channel that includes celebrity news into its fashion broadcast (Stahl 8), which might be one of the reasons for its high viewer ratings.
Lack of audience-specific Approach
Being the one and only channel to provide a never-ending broadcast of industry news and information, TFC has never considered narrowing down its marketing strategy to address specific groups of people. For example, Stahl explicitly states that addressing male groups was never part of the company’s strategy (6), which may be the reason for relatively low ratings among male viewers. Also, as noted in the study, the majority of TFC’s audience is comprised of female viewers aged between 35 and 54 (Stahl 2). The segment of Planners & Shoppers is mostly comprised of viewers in this age range, which means they are interested in value (Stahl 8) and are less likely to buy expensive products from premium advertisers, which, in turn, lowers the company’s advertising revenues. This audience is also relatively loyal, which means that, as long as the channel’s most popular series are kept in the program, it would be possible for the executives to reshape the daily program to attract more audiences without losing the interest of this viewer segment.
Comparing to its major competitors, TFC has a low consumer interest, which also affects the company’s revenues. For example, Stahl writes that “TFC had achieved a 3.8 rating on consumer interest in viewing, while the two competitors with new fashion programming had scored higher: CNN had scored 4.3 and Lifetime a 4.5” (5). The perceived value of the channel was also relatively low: were CNN and Lifetime scored 4.4 and 4.1 respectively, TFC’s perceived value was at 3.7 (Stahl 5). Given the fact that the channel’s awareness score does not show such a dramatic difference to the competitors (Stahl 5), it is clear that the problem is not the lack of people’s knowledge about the channel, but rather the lack of interesting programs for the audience to watch.
Evaluation of Scenarios
The three separate scenarios provided in the case study focus on increasing the channel’s coverage of premium populations. For instance, the first scenario proposed a broad, multi-segment approach to three different consumer categories: Fashionistas, Planners & Shoppers, and Situationists (Stahl 6-7). This option included a major investment in the channel’s an advertising and marketing strategy, as well as into programming (Stahl 6). However, given that the vast part of the proposed audiences would be those interested in value and have a lower percentage of young female viewers, as well as viewers with a high income (Stahl 10), this strategy would not be helpful in increasing the channel’s advertisement revenues.
The second option outlined in the study was to focus on Fashionistas only, thus achieving an increase in younger viewers with high income (Stahl 7, 10). Indeed, this scenario would help to reach a substantial growth in advertisement revenues (Stahl 7). However, the percentage of Fashionistas is still relatively low compared to other segments of viewers. Moreover, Fashionistas are less concerned with value and are more likely to be interested in inexpensive items and brands (Stahl 10), which means that tailoring the program for them would decrease the interest of other popular consumer categories, especially those for whom value is an important factor. The third scenario included targeting both Fashionistas and Planners & Shoppers by developing a well-rounded programming structure to achieve and preserve the interest of both segments.
De Lacey, Martha. “Death of the Metrosexual?” The Daily Mail, 2012, Web.
Stahl, Wendy. “The Fashion Channel.” Harvard Business School Brief Cases, no. 2075, 2007.