The Fashion Channel

The Fashion Channel, TFC, was founded in 1996. TFC was a successful TV cable network and was the
only channel which was completely dedicated to fashion and was broadcasting 24 hours a day, 7
days a week, with upto date and amusing features. For more than a decade TFC was focused on the
mass market and did not focus on any target segment to appeal to as broad an audience as possible.

In 2006, seeing TFC’s success, other channels Lifetime and CNN launched fashion related
programming blocks which were achieving notable ratings, even higher than TFC in terms of
viewership, awareness and perceived value.

To retain the TFC’s position as market leader in the fashion segment andalso competing with other
networks for ad buyer, TFC’s higher management planned for a modern marketing strategy.

Problem Statement and Challenges

The Fashion Channel, which is a successful Cable TV network dedicated solely to fashion, is looking
to strengthen its competitive position through TFC’s new segmentation and positioning strategy. TFC
is targeting the consumers with four marketing tools - traditional and internet advertising, public
relations and promotions. Building a strategy to secure The Fashion Channel’s position as the market
leader has the following challenges.

● Advertising Revenue : As Advertising was TFC’s primary growth opportunity, it is crucial to

attract ad buyers as they tend to look at the viewer’s rating , audience’s characteristics and
programming context.As marketing price is dynamic, It is important to increase the ratings
and attract a large number of viewers.
● Cable Affiliate Fees : Being the second source of TFC revenue with limited opportunities to
raise fees.TFC has to maintain the satisfaction levels with affiliates as they tend to drop
channels when viewers move away.
● Consumer Interest : Having an above average rating of 3.8 on consumer interest in viewing.
TFC has to target a set of unique segments with new schemes to improve its rating and
make them loyal to TFC.
● Awareness : TFC has to invest in a major marketing and advertising campaign as well as
programming to improve their rating and retain the interest of the target segment . As there
is always a risk of consumers moving to premium channels and on-demand channels.
● Perceived Value: Investing in new Programme or improving existing programme should
attract the target segment. As people have alternatives in the form of competitors who
would copy the concepts and skim more viewers .
Porter’s Analysis
Competitive:
The competitive intensity is high at the moment for TFC. Although it is the only channel which offers
24 x 7 fashion content, other TV channels are also airing their own fashion programmes. Notably
CNN and Lifetime which were airing fashion programs. CNN was airing its show M-F, 8-9 pm and
Sat.-Sun, 10-11 pm whereas Lifeline was airing Monday-Friday, 9-11pm. Lifetime was attracting
younger female viewers from TFC which caused a fall in ad revenue for TFC and CNN had good
viewership from men. Both these segments are crucial for TFC to increase their ad revenue.

Apart from falling ad revenue, TFC was also facing challenges in its attractiveness to cable affiliates.
The ratings of TFC were trailing CNN and Lifetime on consumer interest in viewing, awareness and
perceived value.

Threat of New Entrants

TFC had managed to grow very quickly without having to put much emphasis on a particular
segment of viewers and it grew on the motto of ‘Fashion for all’, parallely their competition took the
advantage of this opportunity to add fashion-related programmes to their line-ups which could focus
on specific viewers which in-turn lead advertisers to approach them as the advertisers could directly
hit their darts towards the prospects.

This is essentially the phenomena that any new entrant could grow upon. The basis of evaluation of
a network was its ability to deliver specific target groups and advertisers would pay a premium to
the networks capable of reaching out to these target groups. New entrants had the advantage of
knowing these facts in advance and they could build and strategize a concept on these lines from the
scratch whereas TFC had to take the risk of changing the concept of the network after all these years
of establishment which could turn out to be successful but could also jeopardize the existing market.

Hence, the threat of new entrants could be assumed to be moderate to high.

Threat of Substitutes
Bargaining power of suppliers
Two major suppliers for TFC are Large multi-system operators (MSO) and Production companies that
produce TV shows. Most US households subscribed through large cable multi-system operators
hence these operators are the only medium to reach audiences for TFC. Major operators are
nationally, Comcast, Time Warner, Cablevision and Cox. Though viewership does not directly affect
the fees that operators pay to TFC, customer satisfaction remains the key parameter which these
operators employ to evaluate channels like TFC. They have the power to drop channels if found
unpopular which is evident from past case studies as well. Hence having an upper edge by being the
only medium to reach out to the audience, these operators have fierce bargaining power in my view.

Noticing the competition from CNN and Lifetime as well as the potential of new players getting into
the fashion channel business, the show producers also have multiple channels to launch their shows
on. However, given that TFC is the only 24/7 fashion channel, many niche fashion show producers
have to compete with each other to get limited slots available on other channels. Hence, in my view,
the bargaining power of show producers is moderate.

Taking into account fierce bargaining power of operators and moderate bargaining power of
producers, overall suppliers have a strong bargaining power.

Bargaining Power of Consumers

Points:

- celebrity focus programmes on prime time

- Shift from “fashion for everyone” to “____” promoting a youthful outlook and logo refresh