The Fashion Channel Case Study
The Fashion Channel Case Study: Friday, 18 October
Please read and analyze this case on market segmentation and targeting options for a cable television network dedicated to fashion programming. No research into the industry or firm is necessary. Please use only the information provided by the case.
Each team should complete Exhibit #4 “Ad Revenue Calculator” and Exhibit #5 “Estimated Financials for 2006 and 2007” and submit a copy of their team’s work at the beginning of class. A spreadsheet is provided to help you with this assignment.
Exhibit 4: Ad Revenue Calculator
Ad Revenue Calculator
Scenario 2 …show more content…
In this segmentation the focus is strong only on “Fashionistas”. The plan is to spend $ 15 million on programming. It is a single segment concentration.
“Fashionistas” plus “Planners & shoppers” segmentation:
This one is a product specialized segmentation with focus on both “Fashionistas” and “Shoppers & Planners”. TFC has to spend $ 20 million on programming in this case.
4) What is the project financial impact of each of the option?
Scenario number 3 has the best financial result: against an increment of $20.000.000 in fixed costs and an increment of $4.151.347 in variable costs, the increment of revenue by Ad sales increases by $138.378.240 and the company can have the maximum net income ($168.867.232) and also the maximum margin (39%).
Scenario number 1, instead, is the worst one: The Fashion Channel doesn’t have extra fixed cost but also their income are the lowest one ($249.080.832) that is $96.864.768 lower than in scenario 3. In this case, the firm can match the same result that reached in 2006.
Scenario 2 is a little worst than scenario 3: they have a little few fixed cost ($70.000.000) as they gain less revenue by Ad sales ($322.882.560) and also the net income and the margin are not performing as in scenario 3.
5) Compare the segmentation options. What are the Pros & Cons (Strengths & Weaknesses) of each option?