Fashion Channel Market Segmentation

The package has ore than 80 million subscribers in the U. S meaning that a large number of people have access to the channel. Conversely, TFH faces several weaknesses. Firstly, the company has not fully diversified its operations; it only specializes in fashion related programming. This could spell doom for the company, especially if the current trend is an indication of the future. Moreover, there is a section of the top management that is reluctant to accept change in the organization. The implication is that Dona’s recommendations may fail to get ratified for fear of the unknown.

Thirdly, the satisfaction level of Tiff’s customers is on the decline. The company is quickly losing customers to the two major competitors, and there are fears that the trend is sustainable. The other major weakness is that the organization has not segmented its market. The company ought to segment its market in order to benefit from the premium fee charged for the highly valued demographics. There are a number of opportunities available for TFH in its external environment. To begin, advertisers are ready to pay a premium for higher rating as well as defined demographic programming.

Channels with higher rating are able to charge more for advertising meaning that TFH can gain additional revenue if appropriate strategies are developed to help increase its overall market rating. Secondly, there is a more room for the company to increase its market size. Fashion specific programming is continually gaining prominence among viewers in the U. S. Market. In addition, viewer’s demand on network content and ad is directly related to the cost of advertisement. The company can thus increase its ad revenue through marketing strategies aimed at increasing viewers.

One of Tiff’s predominant threats is its two chief competitors: CNN and Lifetime. The two are constantly eating into the Tiff’s major revenue base, and may even force the company out of the market. The second threat is that TFH is only entitled to $1 per subscriber. This is quite a small portion that cannot fully sustain the company’s operations. Besides, there is a threat that TFH may get dropped from the basic cable platform if subscribers satisfaction fails to improve. This may mean total loss for business. Tiff’s Central Strategic Issue The company appears to lack a clearly defined business strategy.

The company’s product-market focus is vague. For instance, TFH has not segmented its market into different segments. Alternative Strategic Promotional Courses of Action Alternative 1 There are a number of marketing courses of action at Tiff’s disposal. The first one, and perhaps most important, is market segmentation. The company should divide its market into different segments and concentrate on maximizing the revenue for the Factionists (scored 23. 1 M) and Shoppers/Planners (scored 42. MOM) segments appears the most economical alternative for TFH.

The two categories of customers are giggly involved in matters related to fashion and are thus a suitable target for the company. There is also economic benefit involved if the company opts to back the strategy. Firstly, an admixture of the two segments yields a high profit margin (39%) in comparison to any other alternative. Besides, the alternative will trigger an increase in overall rating by 20%. There is a potential rise in the company’s rating from 1. 0 to 1. 2 consequently leading to increased revenue. In addition, this segmentation has the highest percentage of viewers 50% (=35% + 15%).

Conversely, the Factionists alternative will lead to an incremental expenditure of $15 million. Decision and Implementation Plan The new promotional plan should be positioned towards a combination of Factionists and Shoppers/Planners segment. Although there are a number of risks involved in this strategy, the returns are investing in the strategy. One of the greatest challenges for the company is maintaining the loyal customers while at the same time wooing new planners/shoppers and factionists. The company must come up with ways of ensuring that they do not lose some customers.

This is achievable through evaluating the programs popular among the loyal customers and ensuring they are not disrupted by the new alternative. The company can also benchmark with its customers to learn how they are able to attract a huge number of factionists. The fact that the alternative may lead to incremental $20 million expenditure presupposes that its implementation is quite expensive. Benchmarking with Lifetime and CNN can help reduce the cost. Finally, the company should devise ways to foster awareness, perceived value, and interest of TTS products among consumers.