Define the Segmentation Scenarios Considered by Dana Wheeler and Discuss the Pros and Cons of Each Scenario

1. Define the segmentation scenarios considered by Dana Wheeler and discuss the pros and cons of each scenario.

The first scenario focuses on a broad segment of the market (Fashionistas, Planners and Shoppers, and Situationalists), representing 80% of households. This segment is slightly female dominated (53%), participates in fashion on a regular basis, enjoys shopping, and is interested in product value. The main advantages are a better alignment with the current TFC strategy, a rating increase by 20%, and low incremental programming expenses. However, the main drawbacks are keeping a very broad positioning and a continued risk of competition, especially with CNN. Also, a CPM decrease to $1.80 would result in a decrease in NI Margin compared to 2006.

The second scenario targets the Fashionistas segment, which represents 15% of households and it is primarily comprised of females between the ages of 18-34. This group has enough purchasing power and enjoys shopping, fashion, and staying up to date with fashion trends. The benefits of this scenario are targeting a small segment of the market, which would appeal to advertisers to sell content, an increase in the average CPM by 75% to $3.5 and in net income by 62% to $151.5 million. Yet, it would imply reducing ratings by 20%, facing new programming investments of $15 million, confronting high disruption from TFC Management, and potential competition from Lifetime.

Finally, scenario 3 focuses on a dual market, the Fashionistas and the Shoppers/Planners, representing 50% of households. This group is mainly composed of females (55%), customers between 18 and 34 years of age, and 6% of households with income higher than $100,000. Customers are fashion-oriented and enjoy shopping. The main advantages are an increase in ratings by 20% and CPM by 25%. Also, by targeting these two segments, TFC will fit the needs of cable providers as it targets the right audience and differentiates itself from the competition. However, this scenario would suppose a high level of opposition from Management and a need for investing an additional $20 million on programming investment.

2. What is the expected financial outcome of each targeting scenario?

• Financial outcome:

• Personal analysis from Business Case Exhibits:

3. Based on your analysis, make a final recommendation to Dana Wheeler. What segment(s) should the Fashion channel target? Why?

I recommend targeting the dual market of Fashionistas and Shoppers & Planners from the third sce-nario because it would result in a better financial performance compared not only to the market situa-tion in 2006, but also to the remaining two scenarios.