Lg Marketing Analysis

Segmentation scenarios considered by Dana Wheeler

Broad-based (“Fashionista” plus “Planners & Shoppers” plus “Situationalist”)

Pros:

This broad-based scenario delivers almost $40 million more net income as compared to that in the 2007 base year ($94M vs $54M). This scenario will boost the rating by 20% (from current 1.0 to 1.2). This scenario does not require an incremental programming expense that costs the other two scenarios $15 million and $20 million respectively to implement. TFC would be marketing to 100% of 18 -34 aged females by targeting all clusters. Also, because TFC would be investing in a major marketing campaign across all clusters, awareness and viewing of TFC would go up.

Cons:

Even though this scenario produces a higher net income than that of current year, the CPM ($1.8) is still $0.20 lower than the current CPM ($2.0). This $0.20 decrease would take place because TFC’s current target audience would not provide enough to maintain the $1.00 CPM. There would also be a lack of differentiation from what TFC’s positioning was before and after the implementation of this scenario. Without changing the programming offered by the channel, TFC would still struggle to compete with Lifetime and CNN.

“Fashionista” Segmentation

Pros:

The fashionista segmentation scenario produces almost $97 million more net income as compared to 2007 base ($151M vs 54M). Highest percentage of females between 18-34 years (premium CPM group) belong to this cluster. Because this scenario targets a premium CPM group, TFC’s average CPM would increase from $2.00 to $3.50. This would also strengthen the value of the audience to advertisers because 50% of fashionistas are females between the age of 18 and 34.

Cons:

The fashionista segmentation scenario results in a 0.2% decrease in TV ratings for TFC. In order to attract and retain the interest of this segment, TFC would need to re-position its programming and hence requiring a $15 million incremental programming expense. Representing only 15% of the households, the fashionista cluster is the smallest of the four clusters and this could lead to a decrease in viewers from the other clusters.

“Fashionista” plus “Planners/Shoppers” Segmentation

Pros:

This scenario results in almost $114 million more net income as compared to 2007 base ($168M vs $54M). Also, this scenario improves TV ratings from 1.0% to 1.2% and average CPM from $2.00 to $2.50. Targeting fashionistas and planners/shoppers will help TFC increase advertising revenue by increasing the number proportion of females ages 18-34 viewers. With this new positioning, TFC could differentiate its programming from its current and future competition by producing programs specific to the fashionista and planner/shopper consumer audience. Their offering would be differentiated enough to reach their target audience without being too specific that it neglects the majority of consumers.

Cons:

Even though the fashionista plus planners & shoppers