THE FASHION CHANNEL

Group 5
Anirudh Krishnan 13P006
Arjun Murthy 13P012
Deepak Sasikumar 13P019
Robin Bansal 13P035
Tejas Shah 13P046
Vikas Guleria 13P056
CASE FACTS
Company Need: To strengthen its competitive position
Willing to spend $ 60 mm (+15 over last year)
Advertising, promotion, and PR
Issues:
Weak understanding of consumer segments
Broad-segment marketing message
Internal members resistant to change
Drop advertising rate by 10% if performance did not improve (ratings)
To do:
Segment customers using collected survey data
Employ marketing tools traditional/internet/PR/etc. for an integrated positioning message
REVENUE STREAMS
Ad-revenue Model
Average viewers 1.1 mm
30-60 second ad-spot
6 minutes each half hour = 2016 minutes week
CPM lower for older and low income, higher for men (all ages) and
women (18-34)
By shifting demographics 25-75% increase in CPM could be achieved
Cable affiliate
Not much can be done as virtually full penetration achieved, and limited
opportunity for fee raise
Runs risk of being dropped if satisfaction ratings were low


COMPETITION
Lifetime driving away ads
because of their focus on young
female audience
CNN focus on men
Lower on ratings consumer
interest and awareness
Need marketing initiatives to
improve consumer interest,
awareness, and perceived value

CONSUMER CLUSTERS
Cluster
Involvement
in Fashion
Size of
Cluster
(%HH)
Demographic
Highlights
Female 18 34 Male
Fashionistas
Highly
engaged in
fashion
15%
Female: 61%
Income: >$100k,
30%
Age: 18-34, 50%
5.03 Million 6.435 Million
Planners &
Shoppers
Participate
in fashion
on a regular
basis
35%
Female: 52%
Age: 18-34, 25%
5.005 Million 18.48 Million
Situationalists
Participate
in fashion
for specific
needs
30%
Female: 50%
Children in HH:
45%
Age: 18-34, 30%
Basic Disengaged 20%
Female: 45%
Male: 55%
OPTIONS AVAILABLE
Scenario 1 Scenario 2 Scenario 3
Target Customer
Cluster
Fashionistas, Planner &
Shoppers and
Situationalists
Single segment approach:
Fashionistas
Fashionistas and Planner
& Shoppers
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
AD REVENUE CALCULATOR
Current 2007 Base Scenario 1 Scenario 2 Scenario 3
TV HH
110,000,000 110,000,000 110,000,000 110,000,000 110,000,000
Avg. Rating
1.00% 1.00% 1.20% 0.80% 1.20%
Avg. Viewers
1,100,000 1,100,000 1,320,000 880,000 1,320,000
Avg. CPM
$2.00 $1.80 $1.80 $3.50 $2.50
Avg. Revenue
Ad Minute
$2,200.00 $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
Programming
Expense
$ - $ - $ - $15,000,000 $20,000,000
ESTIMATED FINANCIALS (FIGURES
ARE IN MILLIONS)
Current 2007 Base Scenario 1 Scenario 2 Scenario 3
Revenue
Ad. Sales $230.63 $207.57 $249.08 $322.88 $345.95
Affiliate Fees $80.00 $81.60 $81.60 $81.60 $81.60
Total Revenue $310.63 $289.17 $330.68 $404.48 $427.55
Expenses
Cost of Operations $70.00 $ 72.10 $72.10 $72.10 $72.10
Cost of Programming $55.00 $55.00 $55.00 $70.00 $75.00
Ad Sales Commissions $6.92 $6.23 $7.47 $9.69 $10.38
Marketing and
Advertising
$45.00 $60.00 $60.00 $60.00 $60.00
SGA $40.00 $41.20 $41.20 $41.20 $41.20
Total Expenses $216.92 $234.53 $235.77 $252.99 $258.68
Net Income $93.71 $54.64 $94.91 $ 151.50 $168.87
Margin 30% 19% 29% 37% 39%
Advantages
The two customer clusters will be loyalist
Compared to 2007 Base, it will generate almost $115 million more in terms of net
income ($168.8 - $54.6 Million)
TV Rating increase 20% (1.0 to 1.2)
CPM Increase 25% ($2 to $2.5)
Targeting 50% of U.S. TV Households, of which around 10 million are females between
18 - 34 and 23.5 million males
Not a spray and pray approach but instead specialized targeting and also not too risky
in targeting only one segment
Recommendation
Scenario: 3
CONSUMER ATTITUDE DRIVERS
Fashionistas

Attitude drivers
1. Anticipate trends
2. Stay up to date
3. Think a lot about fashion
4. Enjoy shopping
5. Develop fashion expertise to share
6. Fashion is entertaining



Planners and Shoppers

Attitude drivers
1. Stay up to date
2. Enjoy shopping
3. Interested in value
4. Fashion is practical


Should run a program between 8-11 PM targeted towards Fashionistas on all
days to attract Lifetime and CNN watchers