the method channel case study essay

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You should read and analyze this case on marketplace segmentation and targeting options for a cable television network focused on fashion coding. No exploration into the industry or organization is necessary. Make sure you use only the knowledge provided by the truth.

Each crew should full Exhibit #4 “Ad Earnings Calculator and Exhibit #5 “Estimated Financial records for 2006 and 2007 and send a copy of their team’s work at the beginning of school. A spreadsheet is offered to help you with this task.

Consider the subsequent questions and come to class willing to discuss the

suggestions and tips:

1) Exactly how learn from the buyer research and market info?

Starting in 1996 TFC (the fashion channel) a new great achievement because of a big audience and no competitors in the commercial.

Noticing the fantastic success competitors such as CNN and lifetime begun to also have fashion-based programmes. As viewers now having a choice to decide which will channel they need to watch the viewer amounts of TFC startet to decrease.

A reason in this is demonstrated by an alpha study which pointed out that both CNN and lifetime got a better reviews in consumers satisfaction in consumer interest as well as in consciousness and also perceived value.

Having their viewer numbers decreasing, TFC needs to pay more attention on the two main revenue avenues: cable affiliate fees and advertising! For that reason they wanted to know who their target audience is to can better interact with them. They reached this kind of with accompanied by a a detailed demographic breakdown which in turn leaded to the result, that 61% of their viewers will be female and 33% becoming aged 18-34 which is below 45% becoming aged 35-54, but the younger group is stronger from this business Added to this they did a GFA associated study which divided the adience into some groups:

Trendy fashion enthusiasts: highly involved in fashion with being 15% of all viewers, 61% becoming female and 50% becoming aged 18-34;

Planners and Shoppers: individuals in fashion frequently with being 35% coming from all viewers, 54% being woman and 25% being older 18-34;

Situationalists: participants stylish for certain needs with being 30% of all visitors, 50% being female and 30% becoming aged 18-34. Also they have 45% with children in the household;

Fundamentals: not intersted in fashion with being 20% of all visitors and 45% being feminine.

2) Which in turn research approach was many helpful to you in producing and considering

the segmentation options?

As mentioned just before, there are 4 groups as a result of the GFA associated analysis. Combines with the results from the demographic malfunction we think it is really helpful for TFC. Indeed, with these researches they have a chance to realize who have their viewers is so they can work upon getting a new audience, most likely within the additional groups. Additionally, they understand who is the most powerful group in their business in order to work on achieving their needs and with these kinds of information it was possible to exercise the segmentation options.

3) What are the segmentation alternatives?

Broad-based promoting:

The goal should be to develop a multi-segment strategy which has a strong concentrate on “Fashionistas plus the “Planners&shoppers or have a focus about women old between 18 and thirty four since this is the most powerful group ” as stated before.

“Fashionista segmentation:

In this segmentation the focus is usually strong only on “Fashionistas. The plan is usually to spend dollar 15 mil on programming. It is a solitary segment focus.

“Fashionistas additionally “Planners & shoppers segmentation: This one is actually a product specialized segmentation with focus on equally “Fashionistas and “Shoppers & Planners. TFC has to spend $ 20 million about programming in cases like this.

4) What is the task financial impact of each of the option?

Situation number 3 has the ideal financial consequence: against an increment of $20. 1000. 000 in fixed costs and a great increment of $4. 151. 347 in variable costs, the increase of income by Advertisement sales raises by $138. 378. 240 and the organization can have maximum net gain ($168. 867. 232) as well as the maximum margin (39%). Scenario number 1, instead, is the most severe one: The Fashion Channel doesn’t have extra fixed cost nevertheless also their very own income are definitely the lowest one particular ($249. 080. 832) that may be $96. 864. 768 lower than in situation 3. In this instance, the company can match the same result that reached 5 years ago. Scenario two is a little worst than scenario 3: they have a little couple of fixed price ($70. 000. 000) as they gain fewer revenue simply by Ad sales ($322. 882. 560) as well as the net income plus the margin are certainly not performing such as scenario several.

5) Compare the segmentation options. Exactly what are the Pros & Cons (Strengths & Weaknesses) of each alternative?

1 . Wide-ranging Appeal (Broad multi-segment approach) ” Circumstance 1 Combination segment of Fashionistas, Planners & Shoppers, and Situationalists Woman older 18 to 34 in all of the of the groupings

2 . Fashionistas ” Situation 2

Alternative to a broad, multi-segment strategy ” focus on single segment (Fashionistas) ïƒ aggressive way. Strong inside the highly appreciated 18-34 female demographic.

3. The Fashionistas and the Shoppers/Planners ” Situation 3 Dual targeting of two segments (Fashionistas and Shoppers/Planners).

6) What is your recommendation?

After the examination of costs, revenues and net income and the review of pros and cons of the 3 options, in respect to all of us the best answer is the situation 3: the “Fashionista as well as “Planners/Shoppers segmentation. We understand that the risk affiliated with this scenario is very high. TFC will lose a selection of their most devoted consumers simply by re-positioning the channel toward fashionistas as well as the planners/shoppers. Furthermore, Exhibit five show us that this scenario likewise requires more programming and operational bills. On the other hand, “Fashionistas has superior interest in fashion and “Planners & Shoppers has the largest cluster size, so it is a good choice to combine these people. Indeed “Planners & Shoppers will improve the rating to be able to attract even more ad purchasers and at the same time “Fashionistas will improve the CPM to get more advertisement revenue.

Moreover, from the Exhibits 4 and 5 we could observe that situation 3 provides more earnings that the other folks and it provides even more net income and a better margin than the different two alternatives. To conclude, the benefits truly perform seem to surpass the risks in this scenario and recommend that concentrating on at two valued organizations “Fashionistas and “Planners & shoppers is the best solution to this problem. It can create more revenues (above all via advertising), generate TFC settle back market stocks and shares quickly and look after TFC’s leading status and core viewers loyalty.

Certainly, The Fashion Channel will also implement this new promoting plan.

One of the more difficult issues for TFC is trying to keep their old loyal consumers while attracting the new fashionistas and planners/shoppers (18-34 woman audience), or else they can certainly reduce more than that they gain. In order to achieve this target, TFC will need to analyze the loyal customers’ favorite applications and make sure to keep these courses when they begin their new marketing prepare. Moreover, The style Channel should look at Lifetime and their Style Today plan to gain a better understanding of that they market to their 18-34 year-old female target audience, so they will be in a very advantageous position for capturing a large talk about of the market.

Furthermore, TFC must regularly find approaches to improve client interest, awareness, and identified value. Finally, TFC must be aware of the competition and be ready to differentiate and re-position its programs in order to earn the best TV ratings and catch the most market share.

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