2007

2

Category stats• Channel: catalog industry is ~$143 billion business; 90 billion is consumer,

53 billion is B-to-B. Sales in DR have grown ~10% yoy, double that of retail and is expected to grow 7% annually over the next 5 years.

• Consumer: consumer profiles for catalog (as distinct from all of direct) are wealthy. Our largest segment (%) comes from “Summit Estates”, with net worth $2mm+, is married, has school age kids and lives in “city and surrounds”. This is a different profile from our typical Brand b direct consumer

• Competition: We have no direct competitor in the catalog industry. Our closest competitors are Brookstone, firstSTREET, Frontgate, Sport’s preferred living and Sharper image...we will have apparel catalog competition

• Multi-channel Synergies:– -Consumers who receive catalogs are more likely to become multi-buyers

online resulting in 15% more transactions and spend 16% more than those who don’t receive a catalog-Of all catalog orders, 43% are processed via telephone and 33% are completed online

– Source: DMA multi-channel marketing report 2005, DMA state of the industry and e-commerce report 2004

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On to 2007: Key Objectives and Strategies Objective 1: Drive the core business• Increase circulation• Increase revenue of existing books• Leverage consumer insight• Use catalogs as vehicle to disseminate loyalty programs

Objective 2: Exploit new opportunities Launch new books

Objective 3: Increase brand relevance• Provide education to consumers • Test new product ideas

Objective 4: Leverage Institute• Leverage Institute “content”• Utilize trainer network

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Objective 1: Drive the core business

Opportunity:

Grow catalog business and expand our relationship with existing consumers

Goal 1:

X million in revenue across all books

Strategies:

1. Increase circulation

2. Increase revenue of existing books

3. Leverage consumer insight

4. Use catalogs as vehicle to disseminate loyalty programs

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Strategy 1: Increase Circulation

Tactics:

1. Analyze house file to find like names

2. Participate in co-op databases to add names

3. Purchase more lists

4. Mail to X and Enthusiasts names

5. Test and expand print advertising

6. Purchase keywords

Rationale:

We maximize what’s working and apply this model to bigger universe of names...our universe gets bigger

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Tactic: Analyze house file to find like names

Description:

• Develop analysis of catalog buyers to determine what characteristics they share

– Develop models based on our current catalog customers

– Use model to activate names within our inactive and requestor files

Consumer / Customer Target:

• Direct customers who are catalog shoppers

• Launch Date / In Market Date: March, 2007

Budget: $X

  Description Q1       Q2       Q3       Q4      

    Jan Feb Mar   Apr May Jun   Jul Aug Sep   Oct Nov Dec

 Activation Modeling      30000                       

Cross functional team requirements: brand b – specifically marketing analystROI: 4.5

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Strategy 2: Increase revenue of existing books

Tactics:

1. Optimize website to improve performance in search engines

2. Leverage promotions and special offers

3. Test and expand email campaigns

4. Expand shipping options

5. Include catalog in all product orders

Rationale:

Leverage what we already own and sweeten the deal for consumers. Use our expertise in DR media to drive more volume

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Strategy 3: Leverage consumer insight

Tactics:

1. House file analysis

2. Book analysis

3. Testing matrix-books and seasonality

Rationale:

Find out who’s buying, what they are buying and when they buy. Allows us to match up consumers with what they need, when they need it.

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Objective 2: Exploit new opportunities

Opportunity:

Cast a wider net

Goal 2:

Diversify catalog portfolio

Strategies:

1. Launch new books

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Strategy 1: Launch new books

Tactics:

1. Enthusiast book

2. Boomer book

3. Women book

Rationale:

Enthusiast segments have much in common.

Will have the ability to target and analyze brand a consumers.

Will target boomers with a brand they know and trust

Get our feet wet with female segment-learn from this

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Priorities1. Participate in co-op database2. Optimize website for search3. Catalog in every package sent4. House file analysis5. Expand shipping options6. Testing matrix and seasonality7. Test and expand email8. Launch women’s catalog9. Launch boomer catalog10. Purchase more lists11. Leverage special offers12. Purchase keywords13. Print advertising14. Utilize trainer network15. Launch enthusiast catalog16. Develop educational copy17. Offer relevant product to our customers

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Testing 2007

Testing New Books Enthusiast Women Boomer

Seasonality Apparel Spring vs. Holiday

Prospect Winter vs. Holiday

Brand B Winter vs. Holiday

Brand A Winter vs. Holiday

Book Vs. Book Brand A vs. Brand B Holiday

Offers 12 months SAC vs. 6 months SAC

Customer loyalty-rewards

Free shipping

Tiered offers/discounts

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Catalog Revenue Forecast 2007

0

2

4

6

8

10

12

14

16

Brand A Brand B apparel Prospect btob enthus women Boomer

2006 2007

Brand A Brand B Apparel Prospect B to B Enthusiast Women Boomer Total

2006 4.4 2.2 0.94 0.51 4 0 0 0 12.05

2007 3.87 5.09 1.88 2.05 6.4 0.84 2.25 1.21 22.38

totals 8.27 7.29 2.82 2.56 10.4 0.84 2.25 1.21 35.64

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Circulation, Revenue, Cost and ROI- detail

2006 Brand A Brand B Apparel Prospect B to B total or average

Circ (millions) 1.80 0.90 0.50 0.50 0.25 3.95

Reponse Rate 0.59 0.59 1.50 0.25 0.40 0.67

AOV ($) 411.00 411.00 125.00 411.00 4000.00

Cost/book ($) 0.72 1.10 1.10 0.90 1.10 0.98

Cost ($) 1.30 0.99 0.55 0.45 0.22 3.51

ROI ($) 3.38 2.22 1.71 1.14 21.82 6.05

Revenue (millions) 4.40 2.20 0.94 0.51 4.00 12.05

2007 Brand A Brand B Apparel Prospect B to B Enthusiasts Women Boomers tot or avg

Circ (millions) 1.60 2.10 1.00 2.00 0.40 0.80 0.50 0.50 8.90

Response rate 0.59 0.59 1.50 0.25 0.40 0.60 1.50 0.59 0.75

AOV ($) 411.00 411.00 125.00 411.00 4000.00 300.00 300.00 411.00

Cost/book (S) 0.70 1.05 1.05 0.75 1.05 1.00 1.10 0.72 0.93

Cost($) 1.12 2.10 1.05 1.50 0.42 0.80 0.55 0.36 7.90

ROI ($) 3.46 2.42 1.78 1.36 22.85 1.05 4.09 3.36 5.05

Revenue (millions) 3.87 5.09 1.88 2.05 6.40 0.84 2.25 1.21 23.59

Catalog Production + Drop Calendar 2006-2007Jan

2006

Feb March

April May June July August

Sept Oct Nov Dec

Jan

2007

Feb March

April May June July August

Sept Oct Nov Dec

drop1 drop2drop2

Production Apparel Fall

Production B to B Holiday

drop 1

drop 1

drop 2

drop 2

drop 2

drop 3

drop 3

Production Prospect HolidayProduction Brand A HolidayProduction Brand B Holiday Pro Winter

Brand B Winter

B to B Winter

Boomer Winter

Prospect Winter

B to B Winter

Brand B Spring

Boomer Winter

Enthusiast Spring

Apparel Spring

Brand B HolidayBrand A Holiday

drop1

drop2

drop3

Apparel Holiday

Prospect Holiday

drop1

drop2

B to B-Fall

Enthusiast Holiday

Women Holiday

= Drops

= Production schedule;

Brand

Brand

B to B

Apparel

Boomers

Enthusiasts

Prospect

Women

Brand A Winter