Essay on Revenue and Net Income

Submitted By pichu80
Words: 936
Pages: 4
Open Document
Fashion Channel Harvard Case Study

Summary of the Case
The Fashion Channel (TFC), a successful cable TV network channel 24 hours a day and 7 days a week, exclusively dedicated to fashion. Founded in the year 1996.

It reached almost 80 million American households who were subscribers to cable and satellite (110 million TV households in the United States. Of these, approximately 70 million were paid to a cable TV service). According to the demographic core survey, their public was composed of women between ages 35 and 54.

In 2006, other channel companies began broadcasting fashion spaces in their channels.

Main Problems
It was facing an escalated competition from the cable channels CNN and Lifetime, which the survey Alpha research study on customer satisfaction showed TFC was not performing well. Leading to the risk of being offered in less appealing packages, which could mean it would be seen in fewer households.

Secondly, TFC had no particular segment of viewers. Their marketing strategy was directed to the widest possible group to achieve the highest levels possible audience. With their motto: "Fashion for All." So, TFC had grown without any detailed segmentation strategy, brand or positioning.

This lack of direction of target market, made it difficult to know which marketing action plan to take, which could also obstruct the growth of the company.

Facts

Based on the customer and market data, TFC largest and current customer base are females between the age of 35 and 54 (representing 27.45% of the viewers). While, their ideal targeting groups are slightly younger females from the age of 18 to 34, which they only make up for 20.13% of the viewers. Generally, this group likes to follow the way celebrities dress. Information about discounts in fashion stores and fashion recommendations are valued as well by this age range. However, it should be noted that their income might be lower compared to other age ranges. On the other hand, male viewers could also represent an interesting customer base for the channel. Males nevertheless, focus more on new designs, and brands. Different to young females, males can be less sensitive to price.

Unfortunately, TFC has the lowest market share with only 1.1M households (representing 1% of the market share). Besides, the biggest customer bases for Fashion Today are females ranging from 18 to 34 years old representing 27.09% of their viewers. They represent a big threat for TFC as the later might profit by targeting this age range in the future. On the other hand, Fashion Tonight from CNN especially targets male customers. Therefore not surprising, males represent 45% of their viewer’s base. Both Fashion Today and Fashion Tonight also have a larger customer base than TFC, which are 3.3M and 4.4M respectively.
Options
In order to change the current situation, Jared Thomas, founder and CEO The Fashion Channel, hired Dana Wheeler, which came up with three alternatives:
First, is to preserve a multi-segment of Fashionistas, Planners & Shoppers and Situationalists. The advantage of this scenario is the increase in net income partially because no incremental costs would be incurred. At the same time, TCL could also target the 18-34 age groups. However, the (CPM) will be $0.2 lower than 2007. Also, in this scenario, no clear targeting group would yet arise.
The second situation is targeting the segment of Fashionistas. The tighter segmentation will put the company in a disadvantage situation with a 0.8% decrease of its market share (0.88M). It also requires an incremental cost of $15 million.
Finally, the risk exists that a large part of the current viewers wants might not be met by this differentiation as programs might be seen as to “professional” or “distinct.” However, buying power in this group is high and (CPM) will go up to $3.5 resulting
Show More

Related Documents: Essay on Revenue and Net Income

Notes On Accrual Accounting

so that the reported net income measures the results of the company’s income-generating activities. Asset Test Test of a reportable segment where its segment assets are 10% or more of the combined assets of all operating segments. Association of cause and effect Costs recognized as expenses on the basis of a direct association with specific revenues; some transactions result simultaneously in both a revenue and an expense. Capital maintenance concept A corporatio’s net income for a period of time…

Words 1700 - Pages 7

Payment Of Requirement: A Brief Note Statement

UNIT 4: THE INCOME STATEMENT 21. THE INCOME STATEMENTThis document lists the revenues and expenses of the financial year and, from the diference between both, it reports the profit or loss of the period∑ REVENUES(∑ EXPENSES)PROFIT / LOSS OF THE PERIOD Decreases in Equity Other than:-Payment of dividends.-Capital reductions.andVoluntary consumption of AssetsIt is received a compensation.ImmediatelyNot immediately It is paidNot paid▼ASSET▲LIABILITYThe consumption of the asset takes place in the future…

Words 454 - Pages 2

Income Statement and Net Income Essay

We will focus on the cash, sales, inventory, revenue and the balance sheet. 1. Maintain brand differentiation Target’s success relies upon their ability to differentiate the experience of their customers from that of other retailers. If Target does not continue to create an attractive brand, they are likely to lose customers in the highly competitive retail market. By failing to maintain brand differentiation, Target’s cash flow and revenues would decrease. Without customers, they would…

Words 921 - Pages 4

Essay on Accounting Case - Lifo Vesus Fifo

| ↑ | FIFO < LIFO | Income tax | ↑ | ↓ | FIFO…

Words 2428 - Pages 10

Questions Essay

these------------------------------------------------- Top of Form Income Statement Data | Quarter 1(in 000s) | Sales Revenues | $50,000 | Operating Profit | 14,400 | Net Income | $ 9,555 | | | Balance Sheet Data | | Total Current…

Words 2317 - Pages 10

Questions On Homework Deprecises

cr Wages Payable (+L) 3,700 c. dr Unearned Revenue (L) 2,200 cr Rent Revenue (+R, +SE) 2,200 d. dr Depreciation Expense (+E, SE) 2,000 cr Accumulated Depreciation (+xA, A) 2,000 e. dr Insurance Expense (+E, SE) 750 cr Prepaid Insurance (A) 750 f. dr Accounts Receivable (+A) 750 cr Service Revenue (+R, +SE) 750 E4-13 Items Net Income Total Assets Total Liabilities Stockholders’ Equity Amounts…

Words 1210 - Pages 5

Essay about Salem Case Study

As illustrated above, the company has extremely large fixed costs which are the main contributor to its net income result. Break-Even Analysis Assuming that intracompany hours are 205, the following is an analysis to determine the number of commercial revenue hours needed to break-even. The following formula was used: Revenue = Variable + Fixed Costs $400(205) + x($800) = (x+205)($28.70) + $212,636.67 $82,000 + $800x = $28.70x + $5883.50 + $212,636.67…

Words 1023 - Pages 5

Recommendation For The CFO Of Athina Building Supplies Ltd.

With this attempt, they are also not violating the matching principle in case they do make sales in 2018, then they will have the write-off cost to match with their revenue (Refer to Appendix 2). ISSUE 4 From examining the income statement and balance sheet for the year-end 2017, we learned that Athina purchased fairly old and poor condition heavy equipment at an auction for $225,000 and thus it needed repairs worth $125,000. These repairs prolonged…

Words 1862 - Pages 8

Essay on Non Profit Hospitals Notes

A performance indicator (operating income/loss) must be reported, plus other changes in unrestricted net assets. This is called the “above/below the line” Statement of Operations (Activity) classification. Statement of Operations -Above the line the line was operating income Operating Revenues are Patient Services Revenue is reported net of employee discounts, contractual adjustments, administrative adjustments and uncollectibles. Capitation Revenue (or premium fees) from fixed fee insurance…

Words 521 - Pages 3

Essay about ADMS 3585 - AR1

ADMS 3585 – GROUP ASSIGNMENT RA 4-1 SHOPPERS DRUG MART (a) The company uses the multi-step format for income statement. (b) Relationship between business and Balance sheet and Income statement Business Reflect in the balance sheet and income statement The company is the licensor of 1,199 Shoppers Drug Mart/Pharmacist full-service retail drug stores across Canada. The company also licenses or owns: + 58 Shoppers Simply Pharmacy + 8 Murale beauty stores + 63 Shoppers Home Health Care stores + Shoppers…

Words 1554 - Pages 7