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CASEPkolino

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$38

$1.2

Toy + Furniture Market

Playroom Furniture

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$24 $4

$3.6

$0.4

Furniture Industry Children's Bedroom Children's Playroom

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$32

2001 2002 2003 2007

$34 $34$37

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$34 $36

$

$800M

Furniture Industry Children's Bedroom Children's Playroom

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FurnitureIndustry

$24 billionIndustry Size

Portion consideredchildren's furniture

Portion consideredchildren's playroomfurniture

PlayroomFurnitureMarket$1.2b

ToyIndustry

$34 billion

$4 billion $6 billion

$.8 billion$.4 billion

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$51

$300

$800

Mass Mid High

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Size:$51MM / Growing: 9% Main Distribution Channels: FAO Schwarz, Toy/Furniture Boutiques Interior Designers (custom made) Direct (Internet)

Unknown number of competitors (many) Very diverse distribution channels (thereis no predominant channel in this segment) No identifiable market leader High margins, low volumesCompetition is based on access tocustomers and looks

Limited number of competitors Dominated by few Companies (catalogs and brand stores) Pottery Barn is the market leader Good margins, good volumesCompetition is based on brand and looks

Limited number of competitors Dominated by few companies (Walmart,Target, and Toys "R" Us) Brio, Imaginarium, and Little Tykes are among the market leadersLow margins, high volumes Competition is based on price

Size:$300MM / Growing: 8% Main Distribution Channels: Pottery Barn Kids Land of Nods Specialty stores and catalogs Direct (Internet)

Size:$800MM / Growing: 7% Main Distribution Channels: Mass Retailers Walmart

"Target" Toys "R" Us Specialty stores and catalogs Direct (Internet)

Brand/Benefits Word of Mouth Interior Designer

Brand/Benefits Word of Mouth Store Display/Catalog

Brand/Licensing Characters Advertising Discount prices

Mass-marketsegment

(expansion)

Mid-marketsegment

(sweet spot)

High-endsegment(entry)

MarketCharacteristics

MarketDynamics

The Furniture Playroom Market

What's drivingthe customer

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Storage Unit

With capabilities of holding toy kits on top of the piece or in the drawers

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multi-purpose

educationalfunctional

beautiful safe fun

mf e

b s f

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Low

Many

Few

High

Licensed (standard)

Little tykes

BrioImaginarium

Bombay Bellini

Land of Nods

Pottery-Bam Kids

Vibel L'achitecte

Small Designers (truck)

Boutiques

Custom made

P'kolino (1)

P'kolino (2)

Fisher-Price

Mid Mass P'kolinoStrategy

ATTRIBUTES

HighPRICE

2000018000160001400012000100008000600040002000

0KitsStorage UnitsTables

1313Year 1

228690

3851Year 2

4771445

4818Year 3

8242551

7618Year 4

11693634

11027Year 5

15334755

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Mfg.receivesdesigns

Time 0 Week 3 Week 4 Week 5 Week 18

Mfg.developsprototype

Production Productready forshipment

begins

P'kolinoreviews

prototype

2nd-50%payment(to Mfg.)

1st-50%payment(to Mfg.)

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OpportunityAssessment+ Planning

Development process and organization

Concept development

Industrial design

Prototyping

Patents and intellectual property

Project development economics

Managing the project

Time-line/Milestone check

Design for manufacturing

2 months 3 months 1 month 2 weeks 2 weeks 5 months

Stage I Stage II Stage III Stage IV Stage V Stage VI

Look Try Level Design Detail DesignTesting andRefinement

OperationsCycle

Learn

Ask

ConceptDevelopment

MissionApproval

Concept +Prototype

Review

CriticalDesignReview

Spec.Review

ProductionApproval

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Month/Activity M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23

Hire child developmentexpert as advisor

Secure funding

Launch RISD/BABSONPR campaign

Web site development

Production 150 tables +storage + kits

Develop institutionalsales channel

Hire marketing/techintern

Launch grassrootmarketing campaign

Production 160 tables +storage + kits (2nd)

Production 400 tables +storage + kits

Production 500 tables +storage + kits

Hire ProductDevelopment ManagerHire MarketingManager

Web site improvements

Marketing campaign

Team focuses on sales

Collection efforts

Collection efforts

Team focuses on sales

Office relocation

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