Case Report-1: The Fashion Channel

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)

Ad Revenue Calculator | | | | | | | Current | 2007 Base | Scenario 1 | Scenario 2 | Scenario 3 | TV HH | 110.000.000 | 110.000.000 | 110.000.000 | 110.000.000 | 110.000.000 | Average Rating | 1,0% | 1,0% | 1,2% | 0,8% | 1,2% | Average Viewers (Thousand) | 1100 | 1100 | 1320 | 880 | 1320 | Average CPM* | $2,00 | $2,00 | $1,80 | $3,50 | $2,50 | Average Revenue/Ad Minute** | $2.200 | $2.200 | $2.376 | $3.080 | $3.300 | Ad Minutes/Week | 2016 | 2016 | 2016 | 2016 | 2016 | Weeks/Year | 52 | 52 | 52
Besides this scenario contains spending $15 million on programming.

Advantages:
This is the one with highest CPM by only focusing on the people that most interested in fashion. After ensuring retention of current audience they may think of new strategies for gaining new viewers by somehow getting attention of people for fashion. By this way average rating may get higher along with CPM which means higher income.

Disadvantages:
Focusing on only one segment is risky because in a case of losing them also may be devastating. Moreover size of the segment is too small (15%) that they are aware of the decrease in the average rating. No matter what decrease in the awareness of the network is not wise when considering long run.

Scenario3:
Focusing on both Fashionistas and Planners&Shoppers segments, those have total 50% size of cluster with higher interest in fashion and most of them are female. Besides this scenario contains spending $20 million on programming.

Advantages:
This is best scenario with relatively higher CPM ($2.5) and average rating (1.2%) which ensures higher income among others.

Disadvantages:
Programming expense is too high. We can expect other competitors to focus on these segments also, so we have to differentiate our products. These all means it is required to have an extra attention while spending that $20 million