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The Fashion Channel Company’s Marketing Research Case Study

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Updated: Dec 9th, 2020

Current Situation

The Fashion Channel’s (TFC) success story is attributed to its 24/7 hosting of all-fashion network. TFC has always delivered its promise of provision of expert advice on men and female fashion for all age groups through the “Fashion for Everyone” vision. The company’s current goal is to create a strategy that could sustain its market leadership position through increased advertisements, improved ratings, and proactive cable affiliation to effectively respond to the current competition.

Five Specific Research Results

The company’s broad base marketing approach has remained profitable in the women segment (35-54 years), which accounts for 45% of total viewers. The marketing approach captures traditional market segment that supports the current growth. Dana Wheeler, senior vice president of marketing, might use this information to reevaluate the marketing strategies to avoid depreciation of the customer satisfaction level. Secondly, although TFC has managed to maintain a strong market leader position, the current competition may attract undesirable market outcomes that might compromise its market strategy in the short and long-term. This is an indication that the TFC’s traditional market segment might be reduced in the event of ‘changed customer’ preference.

Dana could rely on this information in formulating a turnaround strategy. Thirdly, TFC previous operational model was supported by its dominance in the market segment. Thus, there is an urgent need to modify the current marketing strategy to survive competition. Dana could use this information in developing competitiveness strategies. Fourthly, the company is facing competition from Lifetime and CNN channels. This information captures the general competitive approach by competitors, such as rolling out 30 to 60 minutes fashion shows beyond their regular lineup. Dana could borrow from such strategies to better TFC’s market leadership position. Lastly, the traditional dominance in fashion channel business is quickly changing as the fashion programming industry. This is a sign of a paradigm shift in marketing management. Dana could use this statistic to create a marketing matrix for self-sustenance of TFC.

Advantages and Challenges of the Three Options

The TFC’s consumer demographic analysis data indicates that the audience of the channel comprises of shoppers/planners, basics, situationalists, and fashionistas. From Dana’s analysis, she suggests that a new women segment (18-34 years) could become a premium target due to their impact on cable affiliation and ad revenues if the “Fashion for Everyone” advertising approach is upheld. Interestingly, the superior demographic lives in the four customer segments. In her assumption, Dana is convinced that the channel could attract a ratings boost of 20%. However, the flip-side of proceeding with a costly strategy might lead to a 10.5% decline in the CPM ad revenues. Dana supports this assumption by the fact that the multi-group plan might not appeal to the current premium customer segment. Apparently, as captured in the company data, Dana is convinced that upholding the current advertising approach has a potential of generating a 28.7% margin and 1.2% average rating. Despite the fact that this formula is likely to ignore other customer segments, the traditional TFC viewership segment would not be affected.

Dana’s second recommendation focuses on the fashionistas customer segment. This group consists of women between the age of 18 and 34 years. Although it represents only 15% of the household demographics, they are valuable in increasing the CPM ads by $1.50 and a margin of 37%. This means that a proactive investment strategy integrating innovative programming would be ideal for appeasing this segment. However, the sole concentration in this segment would be detrimental to the company because it might result in total viewership drop and negatively distress the cable affiliations and ratings. At a total cost of $15 million per annum, decreasing the loyal traditional segment would be very costly to TFC than the advertisement revenue realized from the fashionistas segment.

Dana’s third alternative is targeting two segments. She suggests targeting the Shoppers/Planners and the fashionistas segments. The planners’ segment is the largest and women between the age of 18 and 34 years form part of a quarter of this group. The proposed dual marketing is estimated to increase the TFC’s ratings to 1.2% on average and CPM ads to $2.5. Implementing this alternative will need an addition of $20 million in the form of programming investment to support programs geared towards new segment.

Recommendation and Rationale

Based on the above analysis, Dana should pursue the third alternative with a trivial twist. Although CNN and Lifetime have similar fashion programs targeting the TFC’s current customer segments, it would be suicidal to completely abandon the traditional viewership segment. Factually, it propelled the company to its current market leadership position. These competitors have limited fashion programming slots that cannot match TFC complex and 24/7 programs. Therefore, it would be prudent for the TFC to increase its investment in innovative programming and marketing to counter the limited slots by competitors. The company should be careful since sub-par programming might dent the current high reputation across the old and new demographics and lead to a decline in total viewership. Moreover, changing the identity of the network during the limited slot time could actually disengage the traditional viewership segment. The third alternative will enable TFC to cage the valued traditional customer segment from potential competition and minimize possible losses. As a result, the company might be in a position to sustain its competitiveness in the fashion programming industry. The third alternative is projected to generate the highest margin of 39% and 1.2% average rating.

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