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The Fashion Channel – Case Study

Decent Essays

The Fashion Channel – Case Study
Exercise 1: What is expected outcome of each of the targeting scenarios? (complete both the Ad Revenue and Financial calculators to fully understand the financial impact of the scenarios)

Exhibit 4: Ad Revenue Calculator TV HH Average Rating Average Viewers (thousands) Average CPM1 Average Revenue/Ad Minute2 Ad Minutes/Week Weeks/Year Ad Revenue/Year Incremental Programming Expense
1 Revenue/Thousand Viewer 2 Calculated by multiplying Average Viewers by Average CPM

Current 2007 Base Scenario 1 110,000,000 110,000,000 110,000,000 1.0% 1% 1.2% 1,100 1,100 1,320 $2.00 $1,80 $1,80 $2,200 $0 $0 2,016 2,016 2,016 52 52 52 $230,630,400 $0 $0 $0 $0

Scenario 2 110,000,000 0.8% 880 $3,50 $0 2,016 52 $0 …show more content…

Also the CPM will increase to $2,5 because of a dual targeting. In addition to this the average Rating will increase from 1% to 1.2%. Cons: To ensure that there were selections aimed at both segments; Wheeler needs to spend $20,000,000 more on programming. Because of the determination only on this two segments it can be that the number of the loyal viewers of TCF will decrease. Exercise 3: If you were Dana Wheeler, what would you recommend and why? If I was Dana Wheeler I would recommend TCF that they should adopt Scenario 3. However, Scenario 3 has a few disadvantages. For example the possibility to lose some loyal viewers and furthermore TCF has to spend $20,000,000 more on programming which means investing a lot of money for them. But in my opinion, in Scenario 3, the benefits exceed the disadvantages. On the one hand through this Scenario the Net Income will increase more than $100,000,000. In addition to that the CPM will increase to $2,5 and the average Rating will increase from 1% to 1.2%. On the other hand 50% of all US Television Households consist of Fashionistas and Planners/Shoppers. In these two markets the 18-34 year old female audience represents 50% and 25% of the cluster respectively. TCF should therefore increase the advertising revenue. The Scenario 3 is better than the Scenario 2 because Scenario 2 only focuses on the Fashionistas

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