Presented By Group 9

THE FASHION CHANNEL

Segmentation and Positioning of TFC
The Fashion Channel
• TFC is a fashion channel established in 1996, having a
long-term monopoly in the market.

• Women above between 35 and 54 were the avid viewers.

• Theme for marketing- “Fashion for everyone”.

• Revenues forecasted for 2006 were $310.6 million, as it

was a successful channel.

• The channel realizes the incoming competition and if

willing to build a modern strategy to become the market
leader.
Organization Hierarchy
JARED THOMAS :
FOUNDER AND CEO

DANA WHEELER NORM FRAZIER :

Senior Vice Senior Vice
President Marketing President of
TFC Advertising and
Sales
 TFC Revenue Models

1. Advertising Revenue Model

• Target was to generate $230.6 million in 2006 from

advertisements.
• The advertising business model was built on
attracting a mix of male and female viewers on a
regular basis as measured by ratings.
• TFC’s Ad Sales team sold access to these viewers
via advertising spots ,6 minutes of National ad time
for every half an hour,24 hours per day for a total of
2016 minutes per week.
• 2006, U.S. consumer advertisers spent almost $20
billion buying spots on cable networks such as TFC.
• Thus, despite stiff competition TFC should focus on
ratings & demographic.
Cont..
2. Cable Affiliate Fee
• To bring in $80 million in 2006 and it was the second
source of TFC revenue.
• TFC was positioned as a basic channel, so most
consumers received it automatically when they
signed up for basic cable service.
• Large Multi-System Operators(MSO) sign multi year
contracts with networks that specify the fee of the
network upon customer subscription.
• TFC negotiated subscriber fee averaged $1.00 per
subscriber per year.
• The TFC fee was at the low end of the industry range
due to specialty niche content of the network.
• Networks that appealed to large numbers of
household charged the highest fees.
• Thus, TFC should focus on making affiliates happy.
 Competitors
• TFC has mainly 2 competitors: Lifetime and CNN have
launched new fashion specific blocks.
1. Lifetime: target market is younger female
demographics
2. CNN: target market is men's segment

• The competitors entered the market by targeting specific

segments and hence had an edge.

• TFC showed fashion 24/7 while Lifetime and CNN showed

fashion specific programs only for some 2-3 hours in a day.
They probably have a wider customer base because of the
other domains.
 Cont.
• Because of more viewers, Lifetime and CNN
might be selling at premium CPM.

• Lifetime and CNN have gained high popularity in

terms in very less time. It can be concluded from
the following data:

TFC Lifetime CNN

Interest of viewers 3.8 4.5 4.3

Awareness 4.1 4.5 4.6

Perceived Value 3.7 4.4 4.1

Competitive Advantage

• TFC is the first in the business and is supposed to have

gained some loyal customers over the time.

• The competitors are broadcasting various domains, so

might fail to provide quality content, TFC can have an

indirect attack on this front.

• The TFC is aware of the threats due to the new entries in

the market and is ready to change its marketing strategies.

Market Research Findings

Highlights of a national consumer field study

The report suggested 4 unique groups Fashionistas,

planners & shoppers , situationalists and basics.

Segments were varied in size.

National Consumer field Study
STRONGLY AGREE SOMEWHAT SOMEWHAT DISAGREE STRONGLY
AGREE AGREE DISAGREE DISAGREE

Knowing most 16% 20% 19% 20% 15% 10%

up to date
trends

Fashion is 15% 12% 15% 24% 19% 15%

interesting

Finding best 14% 25% 20% 20% 15% 6%

value clothes

Spending on 15% 20% 20% 20% 15% 10%

special clothes

Watching 25% 20% 10% 10% 20% 15%

fashion is
entertaining.

TFC favorite 15% 10% 20% 16% 16% 23%

channel on
cable

TFC is best 9% 21% 28% 20% 12% 10%

place for
fashion
information
 Basics-
Fashionistas-
Disengaged Highly engaged
in fashion.

Planners and
Stituationalists-
shoppers –
Participate for
participate
specific needs.
regularly
 Fashionistas
Females-61%
Age : 18-34 (50%)

Planners and
Basics Females Shoppers.
-45% DEMOGRAPHICS Females -52%
Age : 18-34
(25%)

Situationalist
Females-50%
Age: 30%
 Segmentation of Market
Research
Segment -1
Segment Clusters Fashionistas, Planner & Shoppers and
Situationalists
• Includes Women aged 18-34
Basics
Fashionistas • Awareness and Viewing will increase rating by
15% 20%
20%
• Strategy will not change audience mix so the
competitive risk will not be eliminated
Segment -2
Fashionistas
• Represents 15% of total households
• Rating is dropped by 20%
• Investment in new program costs additional $15
Planners & million
Situationali shoppers
sts 35%
30% Segment -3
Fashionistas, Planners & Shoppers
• Increases Rating by 20%
• Investment in new program, costs additional $20
million
Ad Revenue Calculator

  Current 2007 Base Segment 1 Segment 2 Segment 3

TV HH 110,000,000 110,000,000 110,000,000 110,000,000 110,000,000

Average Rating 1.00% 1.00% 1.20% 0.80% 1.20%

Average Viewers
(Thousand) 1,100 1,100 1,320 880 1,320

Average CPM $2 $1.80 $1.80 $3.50 $2.50

Average Revenue $2,200 $1,980.00 $2,376.00 $3,080.00 $3,300.00

Ad Minutes/Week 2,016 2,016 2,016 2,016 2,016

Weeks/Year 52 52 52 52 52

Ad Revenue/Year $230,630,400 $207,567,360 $249,080,832 $322,882,560 $345,945,600

Incremental Expense   0 0 $15,000,000 $20,000,000

 Estimated Financials for 2006 & 2007
  2006 Actual 2007 Base Segment 1 Segment 2 Segment 3

As Sales $230,630,400 $207,567,360.00 $249,080,832.00 $322,882,560.00 $345,945,600.00

Affiliate Fees $80,000,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000

Total Revenue $310,630,400 $289,167,360 $330,680,832 $404,482,560 $427,545,600

Expenses          

Cost of Operations $70,000,000 $72,100,000 $72,100,000 $72,100,000 $72,100,000

Cost of Programming $55,000,000 $55,000,000 $55,000,000 $70,000,000 $75,000,000

Ad Sales Commissions $6,918,912 $6,227,020.80 $7,472,424.96 $9,686,476.80 $10,378,368.00

Marketing &
Advertising $45,000,000 $60,000,000 $60,000,000 $60,000,000 $60,000,000

SGA $40,000,000 $41,200,000 $41,200,000 $41,200,000 $41,200,000

Total Expense $216,918,912 $234,527,021 $235,772,425 $252,986,477 $258,678,368

Net Income $93,711,488 $54,640,339 $94,908,407 $151,496,083 $168,867,232

Margin 30% 19% 29% 37% 39%

Recommendation
• We would like to recommend that TFC should apply strategy 3,
A dual segmentation of Fashionistas and Shoppers/Planners.
• This strategy acquires half of the females of age group 18-34.
• This will generate the higher net income compared to the other
two scenarios, also will generate the greatest margin which is
39%.
• Increase Rating to 1.2% and rise satisfaction, that consequently
will boost attractiveness of TFC to cable affiliates and increase
CPM to $2.5.
• By Focusing on this particular strategy of 2 segments will give
TFC an opportunity to differentiate itself from the competitors
and assure long term growth by creating valuable fashion and
entertainment programs that will meet customers’ needs.
20009 – Anushka Sharma
20025 – Koushik Samudrala
20038 – Ravi Mahawar
20051 – Shrutika Joshi
20245 – Ridhika Dhir