Fashion Channel Case Hbr Essay

1015 Words Apr 10th, 2013 5 Pages
Case Report-1: The Fashion Channel

1) What is expected outcome of each of the targeting scenarios? (complete both the Ad Revenue and Financial calculators to fully understand the financial impact of the scenarios)

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 | Average Rating | 1,0% | 1,0% | 1,2% | 0,8% | 1,2% | Average Viewers (Thousand) | 1100 | 1100 | 1320 | 880 | 1320 | Average CPM* | $2,00 | $2,00 | $1,80 | $3,50 | $2,50 | Average Revenue/Ad Minute** | $2.200 | $2.200 | $2.376 | $3.080 | $3.300 | Ad Minutes/Week | 2016 | 2016 | 2016 | 2016 | 2016 | Weeks/Year | 52 | 52 | 52
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Although there is a cost of 20 million on programming, having average rating 1,2% with a relatively high CPM makes Ad Revenue higher and as a result Net Income becomes $168 million. Net income in Scenario 2 is $151 million lower than Scenario 3, whereas Scenario 1 has the lowest $77 million.

2) Analyze the segmentation options and discuss pros and cons of each.

Scenario1:
Targeting on women aged 18 to 34, with a cross segment strategy by focusing on on Fashionistas, Planners & Shoppers and Situationalists.

Advantages:
Increase in rating from 1.0 to 1.2 with the increase in awareness and viewing of the channel by investing in a major marketing and advertisement campaign. We can expect promising returns in the long run with the rise of popularity of the network.

Disadvantages:
While the level competition is getting higher, we cannot wait for the long run, what we need is instant return for short run. The strategy does not put an end to competition to gain Premium segments so there is a risk of facing lower CPM. Since there is no real change in viewers’ type and programming, the CPM will drop by 10% or more and

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