Case Study – the Fashion Channel

1197 Words May 8th, 2012 5 Pages
Case Study – The Fashion Channel

Abstract
In this paper I will discuss the pros and cons of segmentation of each of the segmentation options presented by Dana Wheeler for improving The Fashion Channel’s marketing plan. The Harvard Business School’s Case study included a wide variety of consumer and market data that must be analyzed to assist with drawing the best conclusion as to what is the best course of action to take. After reviewing the data and looking at the options presented, I will recommend the best course of action.

Background
The Fashion Channel was founded in 1996 as the first TV cable network devoted solely to fashion. From 1996 until 2006 The Fashion Channel experienced constant growth well above the industry
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A third alternative would be to target both the Fashionistas and the Planners & Shoppers. Her estimate showed that targeting both of these segments would drive the ratings to 1.2 the potential CPM of $2.50. However, it would cost an additional $20 million, $5 million more than the second alternative, to develop programming and advertising to target both of these markets.
Conclusion
Based on The Fashion Channel’s estimated financials for 2006 and 2007, from Exhibit 4 and 5 in Stahl’s HBR article, I have created two spreadsheets, considered in appendix 1. The calculations indicate that continuing the undifferentiated marketing strategy would result in a 1% decline in profits. However, that goes on the assumption that the competing networks will not continue to erode the market for The Fashion Channel. In all likelihood the 1% decline is a best case scenario. The first alternative shows a 3% increase in profit margin for almost an additional $10 million, with no additional outlay in marketing or programming costs.
The second alternative, focusing mainly on the Fashionistas, projects a healthy profit increase of $70 million a year, even though it requires $15 million a year increase in marketing and programming costs. However, it ignores the possibility of alienating the substantially large demographic of the Planners & Shoppers. Retaining this

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