FT Case Study 1

Running head: TEMPORARY CHANGES FOR LONG TERM SUCCESS 1
Case Study 1
Temporary Changes for Long Term Success
A recommended course of action for The Fashion Channel
Felicia Thomas
Marketing Management and Innovation (2162)
AMBA 650 9043
University of Maryland University College
Wednesday, May 10, 2016

I. Facts/Background
The Fashion Channel (TFC) is a cable-TV network that began in 1996. TFC offers 24/7 shows
consisting of fashion news, features, and information. Although they have experienced success in
the past, they currently need to strengthen their competitive position (Stahl, 2007).
Competitive position of TFC
TFC competes against Lifetime Fashion Today (LFT) and CNN Fashion Tonight (CNN) who
both launched fashion-specific programming in 2006 (Stahl, 2007, p. 2) and have viewer ratings
that pass TFC exponentially. TFC also leads in the 35-54 women segments. TFC is being
outperformed by CNN and LFT based on the Alpha research study. TFC has the lowest number
of household viewers, average rating, and interest among viewers. They appear to be providing
average service but are underperforming when compared to their competitors.
Crucial Facts
TFC’s quick success lacked segmentation, branding, and positioning strategy. (Stahl, 2007, p. 2)
TFC’s Advertising Revenue Model and Cable Affiliate Fees is their only revenue sources.
TFC’s Didn’t market to specific viewers so they didn’t recognize its impact on profitability.
TFC is 10 years older than their competition yet its competitions success exceeds them
exponentially.
Interpret Charts and Figures
Exhibit 1 indicates that women watch slightly more television than men. Segments between ages
18-34 and 35-54 watch the most television, with the later watching the most. TFC has a 1.0
rating. They are leading in attracting the 35-54 and are head to head against CNN >74 segments.
Although TFC outperforms CNN in the 35-54 segment, that same segment is CNN’s top
segment, those viewers are receiving celebrity focus, during limited time frames unlike TFC.
Overall Exhibit 2 presents neutral responses from subscribers. Question 4 showed a majority of
the population that enjoy watching fashion programs. Question 5 indicated that TFC had the
highest score in detractors. (Keller & Kotler, 2016) Question 7 indicated that consumers
generally like to shop for special occasions. Question 12 could be an indication that fashion is
not of major interest to the majority of consumers. Yet question 19 indicated that most people
feel they have more interest in fashion than others. Question 20 indicated that the majority of
consumers find TV fashion programs interesting. The final question indicated that TFC is
neutrally preferred by consumers.
Exhibit 3 provides detailed information about fashionistas, planners & shoppers, Situationalists
and basics clusters. The fashionistas represent the smallest size of the cluster yet have the highest
buying power among them. Planners and shoppers are the second largest cluster and have a high
interest on fashion TV and tend to care most on value. Situationalists have slight interest in
fashion TV and are relatively the same size as Planners & Shoppers but they tend to purchase for

special occasions. The basics represent those who have low interest in the subject matter and are
relatively disengaged.
Exhibit 4 forecast revenue based on entering rating, viewers, and CMP averages. The results
indicated that the higher the average rating, the lower the incremental programming expense.
The exhibit further justifies the importance of having a high CPM, as a piece of it is reflected
through the demographics targeted.
Conclusions made based on the interpretation of the charts and figures were that targeting the
most profitable segment, increasing customer perceived value, and minimizing program
expenses is the best recipe for success in this industry. The best scenario indicates that it is better
to service a smaller profitable segment requiring lower programming costs.
Judgments and Decisions
Jared Thomas originally wanted the marketing message to be to a broad group in order to
achieve the highest number of viewership. (Stahl, 2007, p. 2) His original message was “fashion
for everyone”. After competition eroded in 2006 he wanted to be known as the market leader.
(Stahl, 2007, p. 2) Thomas planned to increase investment in advertising and hire experienced
marketers. (Stahl, 2007, p. 2)
Norm Frazier wanted to drop advertising pricing if the network didn’t perform. She noticed that
Lifetime is attracting younger women and CNN men so they are getting premium CPM.
Wheeler believed that TFC needed to maintain their ratings and not change the offerings in a
way to disappoint viewers. (Stahl, 2007, p. 3) Wheeler believed the network achieved full
penetration so there was limited opportunity to raise fees. (Stahl, 2007, p. 4) She also believed
revenue growth would be driven by increasing viewership (ratings) and increasing advertising
pricing. She wanted to accomplish this by “delivering quality audiences, as demanded by
advertisers.” (Stahl, 2007, p. 5) This would be challenging since they also need marketing
initiatives to improve consumer interest, awareness, and perceived value. (Stahl, 2007, p. 5)
Wheeler planned to build a segmentation strategy in order to implement marketing tools to reach
target consumers. (Stahl, 2007, p. 3)
SWOT Analysis
Strengths
Established tenure in the market
Strong successful sales staff
Weaknesses
Limited demographic information
Limited revenue streams
Low commitment from viewers
Lowest average rating
Lowest household viewers
Opportunities
Market to Fashionistas and Shoppers/Planners
Foster innovation as a niche company
Launch parties and special occasion line
Threats
Poor Alpha research results can make them lose
household viewers
Lose existing viewers by changing programs

Questions
1. Have CNN and Lifetime taken viewers from TFC or have they grown the market by
upselling to their existing client base through brand recognition?
2. How are we accounting for non-subscribers? They are a potential market.
3. What potential opportunities are there with non-subscribers? Just because they are not
accounted for doesn’t mean they cannot be serviced. For example, Xbox and PlayStation
integrated internet TV into their gaming systems which converted non-gamers by
responding to their unstated needs. (Keller & Kotler, 2016, p. 9)
Thesis Statement
Focusing on one high profit segment resulted of higher revenue and net income. The analysis
determined that Scenario 2 is the best alternative among those presented but lacks thorough
market research that supports the ultimate goal for TFC to lead the industry.
II. Identification of Key Issues
The key issues were the initial lack of segmentation strategy; limited market research; antiquated
marketing philosophy; and lack of customer loyalty.
Key Issue 1 was that TFC did not segment viewers. During the infancy stages of TFC’s
development they should segmented viewers to determine how their needs compare to TFC’s
offerings. TFC not only lacked knowledge of the segments but the impact that each segment had
on profitability. The ramification was that competitors attracted customers whose attitude drivers
aligned with their programming profile.
Key Issue 2 was insufficient market research processes. Several decisions were made without an
understanding of the real problem preventing TFC from being the industry leader. Increased
advertising was not a factor in TFC’s profitability nor average numbers of viewers. The CPM
price did not make a significant impact on viewer ratings or profitability. Scenario 2 implied that
high numbers of viewers was not the solution as well. Keller and Kotler suggest five steps in
marketing research process to transform a problem to a decision. (Keller & Kotler, 2016, p. 103)
The ramification was a prolonged viable solution.
Key Issue 3 is that TFC has a selling marking philosophy that expects the viewer to fit their
business profile. For example, viewers ages 35-54 make up a large segment for all channels but
that profile does not fall into any of the identified segment clusters for TFC’s industry. The
ramification was their competitors created the right product offering to fit viewer interest.
Key Issue 4 is the lack of customer loyalty. According to Keller and Kotler, “successful
marketers are those who cultivate customer satisfaction and loyalty.” (Keller & Kotler, 2016, p.
127) Being first in the industry provided TFC an exclusive opportunity to cultivate loyalty from
viewers. TFC was positioned to appeal to viewer attitude drivers so that potential competitors
would have barriers to entry. Their competitor’s ability to quickly penetrate the market and

surpass their success, while lacking the tenure and experience in fashion channel marketing is a
sign that initial customers did not perceive enough value to warrant their loyalty.
III.Listing of Alternative Courses of Action
The alternative courses of action are for TFC to continue using its historical business strategy,
implement scenario 2, or implement scenario 3 as a short term solution so that they can invest
time to develop a marketing strategy using market research in order to sustainably attract and
retain the right segments.
IV.Evaluation of Alternative Courses of Action
The advantages of continuing with their existing business strategy are not agitating existing
customers, maintaining program costs, and increased advertising, the disadvantages are a 7
percent decrease in total revenue, 8 percent increase of expenses, and a 63 percent decline in
profitability. These factors do not support the goal of TFC leading the industry.
Scenario 2 would allow TFC to focus on the Fashionistas, the smallest yet most engaged segment
cluster. Implementation increases the CPM by $1.50, generates over $92 million in additional
revenue, and lower incremental programming expense. The impact of increased advertising costs
results in stagnant profitability and a lower average rating. Overall this course of action would be
acceptable but it does not address the real problem that TFC is experiencing which is the need to
strengthen its competitive position and lead the industry.
Good marketing is no accident. (Keller & Kotler, 2016) Scenario 2 appears to be the logical
solution but original goal was for TFC to build a modern brand strategy and be the market leader.
To achieve this TFC should thoroughly undergo the market research process to avoid temporary
fixes. Unforeseen implications such as losing distributor support should be explored beforehand.
In following Clemons guidelines (Clemons, 2008) for marketing strategy transition, TFC should
temporarily implement Scenario 3, appealing both Fashionistas and Shoppers/Planners which
represents the most interested clusters. In the interim TFC can conduct market research for a long
term course of action to achieve the goal. TFC can then that understands the implications of
further engagement with the Situationalists and Basics segments. Scenario 3 also yields the most
immediate revenue and net income, increases the average rating and the number of average
viewers. Those immediate resources can fund R&D and new marketing initiatives. Targeting the
Fashionistas and Shopper/Planners focuses advertising on the most profitable segments while not
showing signs of instability from sudden changes. Disadvantages to this course of action are that
expenses will be at an all-time high and profitability will decrease by 1 percent.
V. Recommended Courses of Action
The recommended course of action is to temporally implement Scenario 3 until a long term plan
is developed that directly achieves the goal. Since Fashionistas and Planners & Shoppers both
share the attitude drivers of “stay up to date” and “enjoy shopping”, and are typically women of
the same age range a suggested strategy is to increase special programs tailored for them. An
example is a one-time special show/documentary that appeals to their attitude drivers.

Bibliography
Clemons, E. (2008). How Information Changes Consumer Behavior and How Consumer Behavior
Determines Corporate Strategy. Journal of Management Information Systems, 13-40.
Keller, K. L., & Kotler, P. (2016). Building Customer Value, Satisfaction, And Loyalty. In K. L.
Keller, Marketing Management (p. 133). Boston: Pearson.
Stahl, W. (2007, June 1). The Fashion Channel. Brief Cases, 1-11.

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