Fashion Channel Segmentation Decision

The Fashion Channel case assignment is to illustrate market segmentation options using a combination of market and consumer data, financial analysis, and stakeholder inputs. The goal is to define segmentation scenarios, calculate expected financial outcomes, complete an online segmentation tool, and make a final recommendation to Dana Wheeler on which segment(s) the Fashion Channel should target.

The Fashion Channel Case Assignment (due on 10/11)
Marketing Principles, Dr. Haewon Yoon
The purpose of the Fashion Channel case is to illustrate the development of market segmentation
options, using a combination of market and consumer data, financial analysis, and stakeholder
inputs. This case will demonstrate: 1) how quantitative analysis can be used to support a strategic
marketing decision; 2) the numbers do not give the entire picture, but are tools to use as a part of
an informed decision-making process.
You can complete this assignment individually, or in a group of 2.
For this homework assignment you need to answer the following questions:
1. Define the segmentation scenarios considered by Dana Wheeler and discuss the pros and
cons of each scenario (1.5 pages, double-spaced; feel free to use essay format, bullet
point-format, table-format etc.). (30 points)
2. What is the expected financial outcome of each targeting scenario? To answer this
question you need to complete both the Ad Revenue and Financial calculators available
in the excel spreadsheet posted on Canvas (see the “Case – Supplementary). Summarize
main results in 1-3 sentences. Submitting only a printout of the excel sheet is not a
complete answer. (20 points)
3. Complete the online Segmentation/ROS/ROI tool as an additional input into your
targeting decision and include a printout of the screenshot of the completed tool. The
online Segmentation/ROS/ROI tool accompanying this case is designed to assist you with
your analysis. (20 points)
The segmentation tool is located at the following web address:
https://cb.hbsp.harvard.edu/cbmp/resources/marketing/multimedia/flashtools/segmentation/
index.html
* Please see the Useful Metrics section below that refers to completing this online tool.
4. Based on your answers to questions 1, 2, and 3 make a final recommendation to Dana
Wheeler. Use both the quantitative (i.e., financial) and qualitative analyses you did. What
segment(s) should the Fashion channel target? Why? How should they position their
brand? (1.5 pages, double-spaced). (30 points)
In sum, what you need to submit are 3 pages of text (answers to questions 1 and 4), printout of
the screen shot of the completed online segmentation tool (answer to question 3), and a printout
of the completed excel spreadsheet with a summary of the results (answer to question 2).
1

Useful Metrics for completing the online Segmentation/ROS/ROI tool:
Net Marketing Contribution (NMC) indicates the company’s gross profit estimates minus
marketing campaign expenditures.
 NMC for market = (Market Size x Market Share x Product Price x Product Margin) –
(Marketing Expenditures)
 NMC for segment = (Segment Size x Market Share within segment x Product Price x
Product Margin) – (Marketing Expenditures)
______________________________________________________________________________
Marketing Return on Sales (ROS) indicates a company’s operating profit (or loss). Essentially
the formula is profit divided by sale revenue, expressed as a percentage. This measure provides
insight into how much profit is being produced per dollar of sales.
 Marketing ROS for segment = NMC for segment / Sales for Segment
______________________________________________________________________________
Marketing Return on investment (ROI) is the net marketing contribution divided by marketing
expenditures. Usually, marketing spending will be deemed as justified if the MROI is positive.
 Marketing ROI for segment = NMC for segment / Marketing Expenditures for Segment
______________________________________________________________________________
*Notes: under the ‘Tool’ tab of the sample problem on the website, the first row “Total size of
segment” represents the segment revenue and is calculated by first multiplying the total market
size (number of jars sold in the market = 80 mil.) by the size of the segment (25%):
80,000,000*.25 = 20,000,000. Next, this number is multiplied by the price of one jar
(20,000,000*$10=$200,000,000).
For the Fashion Channel case:
1) Total size of segment (first row) is asking you to figure out how much money total (i.e.,
revenue) the Fashion Channel is generating under each segmentation scenario. You have
already calculated that as part of Question 2 in the Excel spreadsheet.
2) Company market share (second row) is asking you what percent of each segment(s) the
Fashion Channel is expecting to capture in each of the three segmentation scenarios.
Since we don't have enough information to make a more precise estimate, assume that you
will capture a 100% of the segment(s) you will target under each scenario (i.e., put 100% for
all three scenarios).
3) Complete the segmentation tool for the three segmentation approaches, as you did in the
Excel spreadsheet.
***************************************************
2