The Fashion Channel

The Fashion Channel

Introduction

The Fashion Channel is a successful cable TV network, solely dedicated to fashion. Since its inception, TFC had grown quickly without communicating a clear detailed segmentation, branding or positioning strategy. However, in 2006, other networks began taking note of TFC’s success and began to add fashion-related shows to their own programming. These new competitive dynamics force TFC to build a modern brand strategy securing the channel’s position as the market leader and lay a foundation for future growth. In this case we will assess the 3 scenarios as proposed in the case, and make a recommendation to TFC. First we will interpret the market and consumer data. Next, we compare the segmentation options from a financial and strategic perspective. Lastly, we will make a recommendation as to what strategy should be pursued.

Market Analysis

As a first step in interpreting the market data, we need to define the market as accurately as possible (Levitt, 1960). TFC operates in the entertainment industry in which it attracts certain customer groups that are attractive for advertisers. Advertising sales account for the largest part of revenue. The market size is approximately 110 million TV households and TFC has a rating of 1%. TFC is a basic channel delivered by cable providers to households. The cable affiliate pays a fee for every household that receives the channel. This fee is fixed and does not vary with viewership. As TFC serves a niche market, the cable affiliate fee is at the low end of the range - $ 1 per year per subscriber. Cable operators carefully monitor viewer satisfaction, and it is therefore crucial to keep viewers and affiliates happy, as unpopular channels may be dropped reducing the number of viewers and revenue. As TFC reached almost full penetration, affiliate fees are not considered to be a growth opportunity.

A recent trend in the market is that other networks began adding fashion-related shows to their...