Lg Marketing Analysis

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segmentation scenario produces desirable numbers in terms of TV ratings and CPM, it requires a $20 million incremental programming expense to account for re-positioned programming. Under this scenario, TFC would only be targeting about 50% of US TV households that make up the fashionistas and planners/shoppers. This could lead to a decrease in their loyal viewers and might negatively affect their TV ratings in future.

What segments should The Fashion Channel (TFC) target?

TFC should target the fashionistas plus planners/shoppers and change the marketing strategy accordingly. There are risks involved but the benefits easily outweigh the risks in this scenario.

Besides the increase in average rating and average CPM, 39% margin and the highest net income among all scenarios ($168M) puts TFC in the most opportune situation.

Fashionistas and Planners & Shoppers make up about 50% of all US Television Households, and in their specific clusters, the 18-34 female audience market represents 50% and 25% of the clusters respectively. Therefore, TFC should not only garner higher TV ratings from this scenario, but they should also increase advertising revenue because of the increase of the premium CPM that the 18-34 female audience market should bring in. The advertisement sales revenue ($346M) is the highest for this segmentation as compared to others.

Although the rating increases in the first scenario as well, but its CPM decreases at the same time. Hence this reduces the ad sales revenue, leading to a lesser total revenue. This isn’t the case in the third scenario in which the CPM increases.

The third scenario is more favourable than the second scenario, which did not include planners/shoppers in the new marketing plan. Although the data shows that both scenarios result in substantial increases in net income, if TFC neglected the planners & shoppers, they would be neglecting a cluster that makes up 35% of all US Television Households and consists of 25% 18-34 female audience members.

Altogether, TFC gives itself the best chance to increase viewership and advertising revenue by re-positioning the channel toward fashionistas and planners/shoppers.