Case Memo Fashion Channel
Ms Dana Wheeler, Senior Vice President, Marketing subject: Suggestions for forthcoming Marketing Plan date: 10/12/2013 TFH is indeed in a rather tricky situation at the moment. Although I agree with you that there is an undeniable need for some substantial changes, I am equally concerned about the negative reception of these changes by our viewers and even our employees. According to me, the aim right now should be to steer our channel way from the risks of declining viewers and advertising prices.
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However, in order to achieve this, I do not at the same time think it would be wise to expose ourselves to higher concentration risks than is necessary. Therefore, my recommendation is to opt for the third scenario as mentioned in your projections, which targets both ‘Factionists’ and ‘Shoppers & Planners’. This strategy could help maintain or limit the damage to our existing viewers, and potentially increase our network rating by 20%; and our annual CPM average from $2 to nearly $3.
This could result in a consequent increase in ad revenues to upwards of $320 million, which is a much better projected delivery than of the first two options. I have explained some reasons below to support this argument. The current CPM is projected to fall by 10% next year if our present audience-mix endures. Change in this area, is therefore vital to Tech’s ability to grow and address increasing competition. Attracting a multi-cluster of viewers, may increase numbers, but will not do much to avoid the probable drop in CPM.
It would be necessary therefore to place importance on attracting a specific viewer demographic which has could contribute towards increasing our ad revenues. As you are aware, the demographic segment of female viewers aged 18-34 commands a higher CPM in the market. Additionally, of the four attitudinal clusters identified in the report from SGF Associates, ‘Factionists’ are found to be comprised of the highest portion of the demographic mentioned above. Planners and Shoppers’ on the other hand seem to be comprised more of our existing viewers’ demographic, hill ‘Sustainability’ and ‘Basics’ are broader clusters, with lower involvement and interest in fashion. It is quite clear from this that the first cluster would be an obvious target for our future marketing. However, given that it comprises of a relatively small portion of the television viewing population of the US, targeting ‘Factionists’ could jeopardize our current viewer numbers and therefore our network rating.
In light of this, I consider it strategically much more sensible to offset this risk by including Planners & Shoppers’ in addition to ‘Factionists’ in our strategy, which could result in achieving a healthy rating, while increasing the number of higher-value viewer (in terms of CPM) demographic. Also, unlike the first scenario, this would avoid over- expansion of our viewer demographic, which is something most advertisers are weary of. I therefore would advise you to seriously consider Scenario 3, which seems to be efficient, both, in terms of performance, as well as in terms of risk.