COMPETITION

1. COMPETITION Lori Cotillo & Dave Morrissey July/August 2008

2. TRAINING OUTLINEWhat we want to accomplish… • Introduce key regional and national competitors • Outline their backgrounds • Discuss strengths and weaknesses • Review Original Works strengths and unique selling proposition • Present methods of reducing competition impact on your business

3. Competitive Profile:Art To Remember • They have been in business now for approximately 10 years • Based in Indianapolis, IN. They have a strong presence in the mid-west and have also begun to expand their geographic reach • They have developed a program that is an exact knockoff of our program, offering both an OP & SBYB Program • Extensive Product Line – 28 products. • Sales Model: Direct mail, telemarketing & trade shows www.arttoremember.com

4. Art To Remember: Strengths • Established player • Regional presence in the mid-west • Expanding nationwide • Good product variety – free S/H • Good merchandising & program promotion

5. Art To Remember: Weaknesses • Product Quality • Magnet is not laminated • Tile is not full bleed • Placemat is simply laminated artwork • Lower Profit Margin • No high margin (40%-50%) products • Average program profit is 25% vs. 33% for Original Works • They don’t have you! • Limited field sales, service or support. This is a tremendous competitive advantage for us.

6. Competitive Profile: Display My Art • A relatively new regional competitor since 2007 in New Jersey • Small sales force; 2 account executives in NJ, 1 in MA • Similar product line as the other small competitors that includes wooden keepsakes, stickers, t-shirts www.DisplayMyArt.com

7. Display My Art: Strengths • Broad product line • Free preview magnet (appears to be business card size with child’s artwork, class, and advertises for company) • Introducing an online ordering system where student’s artwork can be viewed on products prior to orders

8. Display My Art: Weaknesses • Inexperience - very new regional player • Very small sales force – 3 account executives • No school recognition program • Lower profit margin – 30% • S/H charge of $1.50/order and $5.00 charge on late orders • High retail prices on many products • These items combined reduce overall value proposition • Appears to have manufacturing limitations: 8” square paper limits creativity, no layered paper, no stickers, no small details… • Orders must be submitted to school in numeric order

9. Competitive Profile: Artware By You • Based in Montclair, New Jersey • In business for approximately 8-9 years • Recently expanded program and product line offerings. Current programs include: • Artwork Program (OP) • Spirit Line Program • Tile Wall Program • Community Service Program • Sales Model: Direct mail, e-mail, telemarketing, trade shows. No current sales force of any significance, though attempting to move in that direction. www.Artwarebyyou.com

10. Artware By You: Strengths • Experienced Player • Will run custom tailored programs • Accept various artwork sizes (Up to 9” x 12”) • Provide product samples for free • Offer personalization on their products (for extra charge) • Extensive product line – 30 products

11. Artware By You: Weaknesses • Limited staff/manufacturing capability • Broad offerings make focus & execution difficult • 30% profit margin • Limited field sales force • No lesson plans or recognition programs • Customer service & support more limited, minimal field support, no Customer Care Center, etc. • Require up-front payment of 50% with order

12. Competitive Profile: Square 1 Art • Based in Atlanta, GA, this competitor was formed in 1999 by two former Original Works employees. Their current programs include: • Artwork program with free magnet • Tile Wall Program • Their sales model is direct mail, telemarketing, trade shows. Limited sales force, though attempting to expand. www.Square1art.com

13. Square 1 Art: Strengths • Market knowledge & experience • Well developed selling proposition: • Free preview magnet • Free personalization on select products • Free product samples provided on request • Broad product line of 30+ products • Offer 33% profit margins on all products

14. Square 1 Art: Weaknesses • Free magnet may actually hurt overall program participation & profits • No art recognition programs • Paper size (8” x 8”) limits creativity • The customer pays all freight charges • Recent price increases have reduced their overall value proposition • Require deposit payment with order • Limited field representation and customer service support

15. Competitive Profile: Artsonia • Based in Chicago, IL, this competitor has been in business for 5-6 years. The company was founded as an internet-based business. • Sales Model: Direct mail, trade shows, e-commerce www.artsonia.com

16. Artsonia: Strengths • High tech appeal • Good product variety • Student and school recognition through award programs and online art gallery • Lesson plans • Broad market reach: • Children, parents, relatives can view artwork on line • Easy process for anyone to order that has access to that artwork

17. Artsonia: Weaknesses • School must either scan artwork and submit electronically or pay to have artwork uploaded to their site • Very low profit margin – 15% • Each participant must pay shipping and handling. Depending on order size this could increase cost by 30%-50% or more • Long time-frame for ordering • Open ended timeframe does not create a sense of urgency for ordering. This can reduce participation level and in turn profit earned by the school on the program

18. Competitive Profile: Silver Graphics • Silver Graphics is a regional competitor based in upstate New York. They started very small working with just a few local schools each year, but within the last three years they have significantly increased their selling efforts in the school marketplace. • Currently owned by two women and a handful of employees. www.silvergraphics.com

19. Silver Graphics: Strengths • Large product line – approximately 30 products in all. Combines all of the common products offered by Square One, Art To Remember and Original Works • Current profit margin is 33% • Provides free shipping • Accept artwork in sizes up to 11” x 14 ½” • Offers school two free 4” x 5” prints of each child’s artwork – one for the child to keep and one for the art teacher

20. Silver Graphics: Weaknesses • Due to the high number of products, product quality is an issue • No local sales representation • Limited customer service staff • If they grow, we would anticipate difficulty working with artwork of different sizes while providing free prints and managing a very large product line

21. Competitive Profile: First ArtWorks • Based in Alpharetta, Georgia, this regional company established in 2007, is quite new to the market and deals with one product only - a child’s artwork framed. The company creates a gallery style presentation of the child’s framed artwork at the school. • Company promotes on their website that they are growing by providing increased numbers of participating students for the upcoming school year, in the State of Georgia alone. www.firstartworks.com

22. First ArtWorks: Strengths • School only has to produce artwork; the rest of the program is run by the company • Gallery style presentation allows artwork to be displayed completed; also provides student recognition • Artwork paper provided is preprinted with school name, county, homeroom teacher name, and grade • Lesson plans are available • Artwork can be viewed online prior to show with access code; option of purchasing ahead so parents do not need to attend show • Unpurchased artwork is unframed and sent back to school • Website provides program promotion tips and incentives

23. First ArtWorks: Weaknesses • Limited product line - Only deals with one product risking less attractiveness to fundraising efforts for a school • Low profit margin – website advertises 20% • Original art is only available for purchase for 2 wks following show; then it is unframed and returned to school • One product may make expanding into other products difficult with regard to manufacturing

24. Original Works Competitive Advantages • Leadership Position • Most experienced • Largest provider • Proven track record • First rate customer service • High level of product quality • Seasoned team of sales, marketing, customer service, manufacturing and finance professionals • Product satisfaction guarantee

25. Original WorksCompetitive Advantages • Large scale manufacturing capability in two locations totaling 20,000+ square feet • Competitive profit margins • School recognition programs • Free materials, paper, lesson plans, shipping • No up-front payment required

26. BEATING THE COMPETITION STARTS WITH YOU • Appreciate your schools • A note, a phone call, $5 gift card • Follow-up • Email, newsletter, what’s new • Sign repeat schools quickly • Sign early, secure your business! • Stay in touch • Don’t let the competition get there first!

27. KNOW YOUR CUSTOMER and WHAT MAKES THEM BUY • What is going on in their school? • You are on the front lines • Who are the current contacts? • Keep in touch, follow-up, district/in-service meetings • What are their needs? Have they changed? Pay attention to clues! • Price • Product mix • Profit • The competition • Just a little bit of effort! • Reveals changes, needs, competitors that have surfaced

28. LEVERAGE THE COMPETITION • Competition is a marketplace reality • Key buying signal - Presence of a competitor • Step up, don’t give up • Use the competition to help you sell • Improve on the competitive selling proposition and seal the deal

29. LEARN YOUR BUSINESS WELL • Knowledge is a competitive edge • Know your products and programs • Understand how they apply to your prospect’s needs • Collect as much information as you can on your competition: - Programs - Products - Service - Price - Location - Promotion

30. SUMMARY • Competition is part of our business. It justifies the market and makes us stronger • You have more control over competition than you think. Know your customer and understand what makes them buy • Leverage the competition and make the presence of competition work for you • Understand your competitor’s strengths and weaknesses. Look at them objectively – through the eyes of a customer • Exploit weakness in a strategic fashion

31. Thank you for you for joining us today! Have a Wonderful Day!