Base on TFC case study

1. Marketing Presentation
on
The Fashion Channel
Presented By-
Mahim, Monika, Tanmoy, Gandharv , Rahul & Neha
Faculty Member-
Prof. Dr Harvinder Singh (HOD Marketing)
1

2. 2
Introduction
• Founded in 1996 by two entrepreneurs, TFC was a successful cable TV
network, dedicated solely to fashion, with up to date & entertaining &
information broadcast 24/7, reaching almost 80 million US households
• TFC had constant revenue and profit growth since beginnings, revenues for
2006 were forecast at $310 million
• The competitors “Lifetime” and “CNN” started TV Time on Fashion Industry by
2006 end
• CEO Jared Thomas hired an experienced marketer, Dana Wheeler, to develop
marketing and brand building to support TFC’s continued growth
• The company needed to strength its competitive position and would be
spending more than $60 million in all national ,affiliate advertising, promotion
and public relation in 2007

3. 3
Market
Position

4. 4
Exhibit
-
1
All TV
Viewers
The Fashion Channel Lifetime: Fashion Today CNN: Fashion Tonight
Time period 24 X 7 24 X 7 M-F, 9-11 pm M-F, 8-9 pm; Sat.-Sun,10-11 pm
Male 49% 39% 37% 45%
Female 51% 61% 63% 55%
18-34 30% 33% 43% 27%
35-54 41% 45% 42% 40%
54-74 21% 20% 14% 26%
>74 8% 2% 1% 2%
Income over $100,000 16% 18% 19% 17%
Average rating NA 1 3 4
Average households 110M 1.1M 3.3M 4.4M
Programming profile All Fashion news, features, and information Fashion news and information Fashion news and features with celebrity focus available

5. 5
Revenue
Model
• TFC was on target to generate $230.6M in 2006 from advertising, attracting a mix of male and
female viewers on a regular basis as measured by ratings
• There were 6minutes of national ad time in each half hour of programming, 24hrs/day for total of
2,016mintues/week
• By increasing the ratings in highly valued demographic groups, the TFC Ad Sales team could achive
CPM pricing increase from 25% to 75%.
• Prices were expressed as CPM (cost per thousand), which represented the price that an advertiser
would pay for an impression.
• The formula for advertising revenue for an individual spot=(households X ratings)/1,000 X CPM

6. 6
Exhibit
4 Ad Revenue Calculator
Current 2007 Base Scenario 1 Scenario 2 Scenario 3
TV Household 11,00,00,000 11,00,00,000 11,00,00,000 11,00,00,000 11,00,00,000
Average Rating 1.0% 1.0% 1.2% 0.8% 1.2%
Average Viewers (in k) 1100 1100 1320 880 1320
Average CPM $2.00 1.8 $1.80 $3.50 $2.50
Average Revenue /Ad Minute $2,200 $1,980 $2,376 $3,080 $3,300
Ad Minutes/Week 2016 2016 2016 2016 2016
Weeks/Year 52 52 52 52 52
Ad Revenue /Year $23,06,30,400 $20,75,67,360 $24,90,80,832 $32,28,82,560 $34,59,45,600
Incremental Programming Expense 1,50,00,000 2,00,00,000
Scenario 1 – Mass Marketing
Scenario 2 – Niche Marketing
Scenario 3- Segment Marketing

7. 7
Exhibit
-
3
Cluster Involvement in Fashion
Size of Cluster
(% HH)
Index: Interest in
Fashion on TV
Demographic Highlights Attitude Drivers
Fashionistas
Highly engaged in
fashion
15% 140
Female ~ 61%
Income > $100k around 30%
18-34 Age Group ~ 50%
• Anticipate trends,
• Stay up to date,
• Think a lot about fashion,
• Enjoy shopping,
• Develop fashion expertise to
share,
• Fashion is entertaining
Planners & Shoppers
Participate in fashion
on a regular basis
35% 110
Female ~ 53%
18-34 Age Group ~ 25%
• Stay up to date
• Enjoy shopping
• Fashion is practical
• Interested in value
Situationists
Participate in fashion
for specific needs
30% 105
Female ~ 50%
Children ~ 45%
18-34 Age Group ~ 30%
• Enjoy shopping for specific needs
• Think about fashion for specific
situations
• Fashion is both entertaining and
practical
• Interested in value
Basics Disengaged 20% 50 Female ~ 45% and Male ~ 55%
• Do not enjoy shopping
• Do not spend much time thinking
about what to wear
• Interested in value

8. 8
Challenges
• TFC has to draw the viewers back on its Channel and also provide meaningful choices to both viewers
and advertisers.
• TFC has to build a modern brand strategy and secure The Fashion Channel’s position as the market
leader.
• There was limited opportunities to raise fees since networks have achieved virtually full penetration
within Households
• It was important to maintain emotional connections and to have building blocks to create brand loyalty.

9. 9
Competitive
Threats
• Lifetime is taking away a lot of ad buys from sales because they’re attracting younger female
demographics & CNN is starting to deliver some great numbers on men.
• The strong fashion programming blocks on Lifetime and CNN represents a double-edge competitive
challenge
• According to alpha research theory:-
1) TFC was facing additional competitive challenges in its attractiveness to cable affiliates
2) TFC had achieved a 3.8 rating on consumer interest in viewing, while the two competitors with
new fashion programming had scored higher

10. 1
0
Strategy
–
Wheeler’s
Plan
Dana Wheeler, Senior VP of marketing of TFC has developed three strategies to mark her
presentation to the company’s leaders:-
• Mass Marketing (Scenario 1): Cross marketing towards women of the age group of 18-34
across all the 4 types of viewers
• Niche Marketing (Scenario 2): : Towards the Fashionistas only (Ad sales give a projection of a
$3.50 CPM for the young audience)
• Segment Marketing (Scenario 3): : Towards the women of age group 18-34 of Fashionistas
and the Planners and Shoppers

11. 11
Strategy
–
Wheeler’s
Plan
• Dana Wheeler has good market data that give insights into the options for identifying the right
segments for TFC & the key would be targeting the rights viewers and offerings advertisers mix of
viewers when compared with what competitors were offering.
• Dana Wheeler knew that the two key levers to drive growth would be:-
1) Increased viewership (ratings)
2) Increased advertising pricing
• TFC can win in market only if the channel builds its marketing programs around the right consumer
segmentation.
• A need for marketing initiatives to improve consumer interest,
awareness and perceived value
• By investing in a major marketing and advertising campaign
as well as programming, over time,
could deliver a ratings boost of 20% (from the current 1.0 to 1.2)

12. 12
SWOT
Analysis
of
TFC
STRENGTHS WEAKNESSES
TFC was the only dedicated network to fashion
24/7
Most of the management unwilling to change to new
strategies
CEO wants the change with $60 million in
budget
Using generalization market strategy “Fashion for
Everyone”
Dana Wheeler with good experience in
advertising
Bad position vs. competitors “Low average rating & Low
number of HH”
OPPORTUNITIES THREATS
Finding loyal untargeted segment Lifetime & CNN with new programs attracting more and
more viewers
Ability to increase rating and Households
rating, and increasing profit
Viewers may not like new programs, which may lead to
drop of TFC out of main cable operators

13. 13
Our
Suggestion
We Suggest Scenario – 3
which is: Targeting two segments in the market (Fashionistas and Planner & Shopper)
Not Generalized as targeting all the market and Not as Risky as
targeting only one segment
• Focusing on specified segments, which will increase the
awareness and improve the competitive position vs. CNN and Lifetime
• Improving TFC image with cable operators

14. 14
Revenue
Comparison
Current 2007 Base Scenario 1 Scenario 2 Scenario 3
Revenue
Ad. Sales $23,06,30,400 $20,75,67,360 $24,90,80,832 $32,28,82,560 $34,59,45,600
Affiliate Fees $8,00,00,000 $8,16,00,000 $8,16,00,000 $8,16,00,000 $8,16,00,000
Total Revenue $31,06,30,400 $28,91,67,360 $33,06,80,832 $40,44,82,560 $42,75,45,600
Expenses
Cost of Operations $7,00,00,000 $7,21,00,000 $7,21,00,000 $7,21,00,000 $7,21,00,000
Cost of Programming $5,50,00,000 $5,50,00,000 $5,50,00,000 $7,00,00,000 $7,50,00,000
Ad Sales Commissions $69,18,912 $62,27,021 $74,72,425 $96,86,477 $1,03,78,368
Marketing and
Advertising $4,50,00,000 $6,00,00,000 $6,00,00,000 $6,00,00,000 $6,00,00,000
SGA $4,00,00,000 $4,12,00,000 $4,12,00,000 $4,12,00,000 $4,12,00,000
Total Expenses $21,69,18,912 $23,45,27,021 $23,57,72,425 $25,29,86,477 $25,86,78,368
Net Income $9,37,11,488 $5,46,40,339 $9,49,08,407 $15,14,96,083 $16,88,67,232
Margin 30% 19% 29% 37% 39%
Highest

15. 15
Scenario
Comparison
Scenario 1 Scenario 2 Scenario 3
Rating
Increase 20%
(1.0 to 1.2)
Decrease 20%
(1.0 to 0.8)
Increase 20%
(1.0 to 1.2)
CPM
Decrease 10%
($2 to $1.8)
Increase 75%
($2 to $3.5)
Increase 25%
($2 to $2.5)
Programming Cost No Cost $15,000,000 $20,000,000

16. 16
ADV-Disadvantage
Analysis
of
our
Suggestion
Advantages Disadvantages
Compared to 2007 Base, it will generate almost $115
million more in terms of net income ($168.8 - $54.6 Million)
$20 million cost for new incremental programming
TV Rating increase 20% (1.0 to 1.2)
CPM Increase 25% ($2 to $2.5)
Targeting only 50% of U.S. TV households
Targeting 50% of U.S. TV Households, of which 50% female
and 25% of them are 18-34 age
Might decrease loyal customers if they are not
included in these segments
Different programming offering for both "Fashionistas and
Shoppers & Planners"
Could decrease rating in the long-run

17. 17
Additional
Suggestion
•Design an App Introduce Subscription
Model
•Special focus on
seasons or big events
•Small slot to ensure
that there is something
for everyone

18. Questions
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