COMPETITION

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COMPETITION

• Lori Cotillo
• Dave Morrissey
• July/August 2008

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TRAINING OUTLINE What 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

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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

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Art To Remember Strengths

• Established player
• Regional presence in the mid-west
• Expanding nationwide
• Good product variety free S/H
• Good merchandising program promotion

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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 dont have you!
• Limited field sales, service or support. This is
  a tremendous competitive advantage for us.

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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

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Display My Art Strengths

• Broad product line
• Free preview magnet (appears to be business card
  size with childs artwork, class, and advertises
  for company)
• Introducing an online ordering system where
  students artwork can be viewed on products prior
  to orders

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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
  childs artwork one for the child to keep and
  one for the art teacher

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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

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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
  childs artwork framed. The company creates a
  gallery style presentation of the childs 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

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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

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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

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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

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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

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BEATING THE COMPETITION STARTS WITH YOU

• Appreciate your schools
• A note, a phone call, 5 gift card
• Follow-up
• Email, newsletter, whats new
• Sign repeat schools quickly
• Sign early, secure your business!
• Stay in touch
• Dont let the competition get there first!

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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

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LEVERAGE THE COMPETITION

• Competition is a marketplace reality
• Key buying signal - Presence of a competitor
• Step up, dont give up
• Use the competition to help you sell
• Improve on the competitive selling proposition
  and seal the deal

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LEARN YOUR BUSINESS WELL

• Knowledge is a competitive edge
• Know your products and programs
• Understand how they apply to your prospects
  needs
• Collect as much information as you can on your
  competition
• - Programs - Products
• - Service - Price
• - Location - Promotion

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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 competitors strengths and
  weaknesses. Look at them objectively through
  the eyes of a customer
• Exploit weakness in a strategic fashion

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