The Fashion Channel Case

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Alma Graduate School Università di Bologna Marketing Management Marketing Case #1: The Fashion Channel Comparison data between Scenarios, to complete information referencing to Slide No. 3 of the FashionChannel Assignment – Group 7.pptx (Power Point file) Scenario 1 Target Group: Fashionistas, Shoppers/Planners & Situationalists Expected Ratings: 1.2 Potential CPM: $1.8 Average Viewers: 1,320,000 Additional expenses: NONE PROS The profit margin will increase to 29% compared to the Base in year 2007** (19%) if this scenario is implemented. By investing in a major marketing and advertising campaign, it is expected that awareness and viewing of the channel would go up and boost the ratings from 1.0 to 1.2 This scenario does not require an increment in programming expense. CONS The profit margin will drop slightly (1% drop) compared to that of the current 2006. The average CPM will drop by 10% when compared to the current 2006 CPM ($2.00) Not targeting a specific market group could mean a loss in market opportunities due to specific aggressive competition from the other networks. **Considering 2007’s Base as a non-changing situation on TFC’s current strategy. Scenario 2 Target Group: Fashionistas Expected Ratings: 0.8 Potential CPM: $3.50 Average Viewers: 880,000 Additional expenses: $ 15 M PROS The profit margin will increase to 37% compared to the Base in year 2007** (19%) if this scenario is implemented. Advertisement may become more efficient; therefore CPM could increase to $3.50. (From $2.00) The targeted segment specifically represents better CPM rates than other groups, compensating for the generalized audience loss. Based on Exhibit 3, Fashionistas represent a 15% of TFC’s audience. By targeting this segment, you also appeal to the Planners/Shoppers segment (35% of current audience). **Considering 2007’s Base as a non-changing situation on TFC’s

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