Interpretion of consumer and market data as Dana Wheeler: Since the very initial days when TFC was

founded in 1996, TFC (The Fashion Channel) reached to almost 80 million US households who subscribed to cable thereby enjoying constant revenue generation and profit growth above the industry average. But then competitors Lifetime and CNN launched fashion-specific programming blocks which achieved notable ratings. Consumers now have options to choose from and the data shows that certain segment of customers are preferring CNN and Lifetime more than TFC. This was happening since when it comes to consumers interest, perceived value and interest CNN and Lifetime scored more than TFC. TFCs two major revenue generation streams were cable affiliate fees and advertising and these have been posed a threat by the competitors fashion programming since they targeted specific market segments and TFC was unable to differentiate the same. The survey by GFE Associates show that there are four major potential viewers segment: The Fashionistas (highly engaged in fashion: 15%), Planners and shoppers (regular participants in fashion): 35%, Situationalists (participate in fashion for specific needs): 30% and the basic disengaged ones: 20%. The demographic highlights show that male consumers fall in the group of basics, while 61% of the Fashionistas are female. Also 50% of the Fashionistas fall in age group of 18-34 years. Expected outcome of each of the targeting scenarios: Dana Wheeler developed three different scenarios to mix their most popular viewing segments and the results it would have on CPM: 1) 1st scenario: To target the Fashionistas, the Shoppers/Planners and Situationalists. This will help to create a wider market base. In this scenario the viewership would increase over time from 1% to 1.2% but the average CPM would decrease from $2.00 to $1.80 (exhibit 4). Overall this scenario would give an increase in advertising revenue of 8% from 2006 to $249 million. 2) 2nd scenario: Focus only on Fashionistas. In this scenario, the average viewership would reduce from 1% to 0.8% due to narrowed focus, but CPM would increase much from $2.00 to $3.50 and thus 40% rise in advertising revenue around $92million (exhibit 4). For this scenario an additional programming cost of $15million per year needs to be incurred, but since it would generate additional revenue, it seems like a good option 3) 3rd scenario: Focuses on Fashionistas and the Shoppers/Planners. This approach will increase the viewership from 1% to 1.20% and CPM from $2.00 to $2.50 (Exhibit 4). The advertising revenue increases by 50% over $115million but at additional investment in programming costs of $20million The filled Exhibits 4 & 5 are on Page 2. Factual analysis of segmentation options & Evaluation: Each of the segmentation options provides increased net income, but there are pros and cons of each:

Segmentation option
Fashionistas,Shoppers/Planners & Situationalists Fashionistas alone Fashionistas and Shoppers/Planners

Pros
Wider market Increase in viewership Increase in advertising revenue Increase in CPM Rise in advertising revenue Increase in viewership Increase in CPM Increase in advertising revenue

Cons
Decrease in CPM

Decrease in average viewership Addtional programming cost Additional investment in programming

Recommendations: Of the 3 scenarios the third is the most likely to meet the needs of TFC. It targets two consumer groups: the Fashionistas containing highly valued 18-34 age female group, and the Planners & Shoppers. This option gives the highest profit margin and net income of $168,867,232. It focuses on a specific segment of viewers and thus the viewers are less likely to go to the hands of competitors. It increases viewership, CPM and advertising revenue. So looking at all these pros, this option is the best for TFC. EXHIBIT 4:

EXHIBIT 5: