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 Confidentiality Agreement

The undersigned reader acknowledges that the information provided by

_________________________ in this marketing plan is confidential; therefore, reader agrees not
to disclose it without the express written permission of _________________________.

It is acknowledged by reader that information to be furnished in this marketing plan is in all

respects confidential in nature, other than information which is in the public domain through other
means and that any disclosure or use of same by reader, may cause serious harm or damage to
________________________.

Upon request, this document is to be immediately returned to _________________________.

___________________
Signature

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Name (typed or printed)

___________________
Date

This is a marketing plan. It does not imply an offering of securities.

 Table Of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . .4
2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . .4
2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . .5
2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . .7
2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . .7
2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.4 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Target Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4.0 Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . 11

4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Implementation Milestones . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . 16
 The Art Sentry

1.0 Executive Summary

The Art Sentry (The Sentry) is a professional art packager and installer serving both the residential
and corporate markets.

Dan Klutz, the founder and owner, is a 12-year industry veteran who designed a new and
innovative packaging system while working with the Cleveland Museum of Art that has since been
adopted by seven other national-class museums. Dan will be offering his skills to the Cleveland,
Ohio art aficionado market.

The Art Sentry's mission is to provide the customer with professional packaging and hanging
services for artwork. We exist to attract and maintain customers. When we adhere to this maxim,
everything else will fall into place. Our services will exceed the expectations of our customers.

Currently, the art packaging/installation market is relatively small. There are several generalists
that perform similar work, however, their skill level is generally not adequate to ensure the safety
of valuable artwork. The necessary skills take time to develop, and Dan, who possesses these
skills, will leverage his experience as a competitive advantage.

Through superior service and customer attention, Dan will steadily grow The Art Sentry's market
share, generating $64,000 in revenue by the end of year three.

Annual Sales Forecast

$70,000

$60,000

$50,000

$40,000
Residential
$30,000 Corporate

$20,000

$10,000

$0
2003 2004 2005

Page 1
 The Art Sentry

2.0 Situation Analysis

The Art Sentry is entering its first year of business. It recognizes the imperative need to develop a
comprehensive marketing program to ensure success. The basic market need is a professional
installation and packaging service for artwork.

Currently, Cleveland has no truly professional service providers. There are some people/companies
that can provide the services, but they lack the skill, knowledge, or desire to do the jobs as they
should be done, particularly in light of the cost of the artwork that is being serviced.

Page 2
 The Art Sentry

2.1 Market Summary

The Art Sentry has collected a fair amount of information about the market and knows the general
attributes of the prized customers. This information will be leveraged to better understand who is
served, what their specific needs are, and how to better meet their needs.

Target Markets

Residential
Corporate

Table 2.1: Target Market Forecast

Page 3
 The Art Sentry

2.1.1 Market Demographics

The profile for The Art Sentry customer consists of the following geographic, demographic, and
behavior factors.

Geographics

• The immediate geographic target is the city of Cleveland, encompassing both the east and
west outlying suburbs, as far west as Parma, as far east as Shaker Heights and Beachwood.
• The geographic area is approximately a 60-mile radius.
• The total targeted population is 17,312.

Demographics

• Primarily female (61%).

• Age 36-62 (with 74% age 43-58).
• 61% have at least one professional in the household.
• 89% have a household income over $85,000.
• 86% have a college degree and 46% have a graduate degree.
• Medium- to large-sized corporations with 50 - 150 employees.
• Have fairly extensive corporate art collections.
• The corporations generally have revenues exceeding $30 million.

Behavior Factors

• Visit art museums or galleries on average once every two months.

• Have active art collections.
• Are likely to have attended at least one lecture or speaker within the last month.
• Are active viewers of the fine arts (opera, theatre, ballet, symphony).
• Corporations collect art as a sign of corporate culture or to portray a sign of success for
clients.

2.1.2 Market Needs

The Art Sentry is providing its customers with professional hanging and packaging services for fine
artwork. The following benefits that are important to customers will be fulfilled:

• Convenience: The Sentry offers its service in the customer's home and offers a wide
range of business hours.
• Professional Service: The artwork that needs service is expensive and customers desire a
service that is high quality to protect valuable merchandise.
• Customer Service: The typical customer is accustomed to a high level of service and The
Sentry will exceed the customer's expectations.

Page 4
 The Art Sentry

2.1.3 Market Trends

The art packaging and hanging industry has seen an increase of services offered from the shipping
centers like Mail Boxes, Etc. Historically people turned to their handyman for art hanging help, but
recently the trend has been shifting to specialists. For packaging services, it was usually the gallery
that would help out their customers with packaging needs. Within the last few years with the
proliferation of the shipping centers, they have expanded their service offerings to include working
with artwork.

Both the handy men and shipping centers rarely have the requisite knowledge to do a professional,
appropriate job for the pieces of art that they are working with. The reason for this simply a lack of
experience working with pieces as expensive and fragile as artwork. While this might seem
counterintuitive for an art gallery since all they deal with is artwork, they rarely posses the
professional skills needed, they provide the service, but its quality is sub-par.

Market Forecast

25,000

20,000

15,000
Residential
Corporate
10,000

5,000

0
2003 2004 2005 2006 2007

Page 5
 The Art Sentry

2.1.4 Market Growth

The art packaging and shipping market is a small niche market. The Sentry has been unable to
collect sufficient information regarding the industry. The lack of information is because so many
different incongruent people have been servicing customers that it is difficult or impossible to
collect information from the disparate sources.

Regardless, the recognition of a strong market need for professional services for the upscale art
collector's market has been communicated to The Sentry by various perspective customers.

Target Market Growth

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
Residential Corporate

2.2 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company, and
describes the opportunities and threats that The Art Sentry faces.

2.2.1 Strengths

• Professionalism.
• Expert skill level, a level that has been obtained by very few.
• A customer-centric business model.
• A lack of serious competition.

Page 6
 The Art Sentry

2.2.2 Weaknesses

• A relatively small market of art aficionados that truly care about the well being of their
artwork.
• The absence of a significantly growing art collectors market.
• A limited marketing budget to aid in generating visibility.

2.2.3 Opportunities

• The ability to convert art owners that do not yet have the appreciation for the care that
their artwork needs.
• The networked community nature of local art collectors who are vocal regarding excellent
service providers.

2.2.4 Threats

• The ability of a competitor to adopt "best practices" and become competitive.

• Potential competition from a larger gallery that decides to hire service professionals for the
express purpose of servicing the Cleveland market.

2.3 Competition

The competition can be broken down into several categories:

1. Handymen: This group of competitors are often called to provide hanging services for
artwork. The type of people that will use this service provider are people that do not
recognize the inherent inferiority of this service provider, or people that just do not seem to
care. This second class of people is fairly unusual that they will spend a decent amount of
money on the art piece but not follow through with the same appreciation of value when it
comes to the installation of their work. This irony is hard to understand but not observe. It
might be explained by the fact that the value of the art is for appearance instead of the
value of the art being a combination of the aesthetic appreciation as well as the art as a
monetary investment.

2. Shippers such as Mail Boxes, Etc.: These competitors handle a fair amount of the
packaging business. Their popularity is based on the perception that they are qualified to
package artwork. Pieces of art require special attention and knowledge that is not
possessed by standard packers. Art pieces are a very distinct type of cargo, with each type
of art, whether a watercolor, a painting, a sculpture, or a mobile requiring special attention
and knowledge in the protection against harm during transport. This knowledge is gained
through very specific work with art, not through general packaging techniques and
experience.

3. Commercial shippers that also offer packaging services: This competitor services the
niche of packaging art to a much smaller degree than the Mail Boxes, Etc. type companies,
and also possesses the same general lack of proper knowledge needed to ensure safe
transport.

4. Galleries: Most galleries offer packaging and hanging as a value-added service to their
customers. It is unusual for a gallery to provide these services for non-customers. Although
one would expect that a gallery would have the professional competence to provide these
services, they generally offer these services as an added benefit that generates little

Page 7
 The Art Sentry

revenue for them, therefore, the quality of these services are not high.

The buying habits many people practice is with little contemplative thought in regards to the best
service provider for artwork hanging and packaging. People often do notspend any time to find the
best service provider. Part of this can be explained by the fact that the customer is unaware that
there are specialized service providers for artwork.

2.4 Services

The Art Sentry provides both residential and commercial customers with art packaging and
installation services. The packaging services will be useful for art that is going to be stored or
shipped. The hanging services can be used if a new piece is going to be mounted in a home or
business, or if an existing piece will have a new home within an existing room/structure.

The Art Sentry's professional skills were learned through 12 years of practical experience as a
shipper, as well as a head installer/packer for a nationally recognized museum of art. The Art
Sentry's services vastly differ from the run of the mill Mail Boxes, Etc. type shipper or the
handyman installer. Having the credentials of a packer is not sufficient to ensure zero damage in
shipment. The packaging of art is a science in itself.

Having a specialized art packager prepare the work for shipment is inexpensive insurance for:

1. The piece of mind knowledge that the item is well protected and likely to arrive at the
destination in one piece;
2. The only way that you can fight a denial of claim from a shipper who damages the piece
due to their mishandling.

It is extremely difficult for a shipper to deny a claim when it has been packaged by The Art Sentry
because of their industry knowledge and experience. Use of The Art Sentry creates a presumption
of due diligence.

Additionally, The Art Sentry is differentiated from the standard handyman that uses traditional wire
to hang the works. Wire is never used by The Art Sentry. Wire is a fundamentally flawed method of
hanging pieces because of the inherent instability of the hanging method. The Art Sentry only uses
hooks to mount pieces. The use of hooks eliminates the possibility of shifting of the object. The
hooks take more time and precision to set up but is the only proper way of hanging art pieces of
any value.

The Art Sentry charges clients either a flat project rate that would be calculated after viewing the
proposed requirements, or an hourly rate.

2.5 Keys to Success

The keys to success are:

• Visibility and customer awareness.

• Professionalism, in both customer care and services provided.

Page 8
 The Art Sentry

2.6 Critical Issues

• Not to take a too conservative approach to marketing. Developing sufficient visibility and
awareness is key. This is especially important for the corporate market that can be very
lucrative as corporations typically have much larger art collections than individuals.
• Become the premier artwork service provider in the Cleveland Metropolitan area.

3.0 Marketing Strategy

The marketing goal will be to raise visibility and awareness of The Art Sentry with the prospective
target segments. The Art Sentry will use a Yellow Pages advertisement as these phone directories
are one good source of information that people turn to when they are looking for a listing of
different service providers.

Another marketing strategy will be a word-of-mouth referral system. Initially this system will be
started through networking efforts based on personal relationships that Dan has formed at the
Cleveland Museum of Art and small local galleries. Once the Museum begins to make referrals to
Dan (this will occur because Dan was a former employee and they recognize his skill), business will
grow. Art aficionados are not a huge group of the population but it is reasonable to presume that
people that collect art have similar minded friends that also collect art so referrals are likely to
increase.

These grass root efforts of word-of-mouth referrals will take a bit of time to develop, but will
provide The Art Sentry with a sufficient flow of customers.

3.1 Mission

The Art Sentry's mission is to provide the customer with professional packaging and hanging
services for artwork. We exist to attract and maintain customers. When we adhere to this maxim,
everything else will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives

• Increase corporate customers by 15% a year.

• Generate 20% more referrals a year from individuals.
• Decrease customer acquisition costs by 8% a quarter.

Page 9
 The Art Sentry

3.3 Financial Objectives

• Obtain full-time employment by the end of month eight.

• Reduce overhead by 10% per year through more accurate forecasting methods.
• Generate enough business to necessitate the hiring of an employee by sometime on the
second year of operation.

3.4 Target Marketing

The market can be segmented into two different groups:

• Residential Customers: This group would require The Art Sentry for packaging a piece of
art that they are selling or if they are moving the artwork. The residential customers will
also use the Sentry to have works hung in their home. The residential customers are often
the "preferred" customer to work for because they are concerned about protecting their art.
These customers are either wealthy art collectors or wealthy investors since they are willing
to spend money to protect their artwork. For them to be willing to protect their artwork, the
value of the artwork will typically exceed several hundred dollars.

• Corporate Customers: They will utilize The Art Sentry for hanging services as well as
packaging the artwork. The corporate customer sometimes cares a bit less about the art
relative to the residential customer because there is less of a personal connection with the
corporation and the artwork. However, if the corporation becomes a customer, they are
likely to have more work than a typical individual customer.

3.5 Positioning

The Art Sentry will be positioned as the premier art hanging/packaging professional for the
discriminating art collector. The Sentry will service both the individual collectors as well as
corporate collections. The Art Sentry will leverage their competitive edge to achieve the desired
positioning.

The Art Sentry's competitive edge is based on the extensive skill and industry knowledge that Dan
possesses; this is very specific knowledge that few people have. This skill set is both positive and
negative. It is positive because it allows The Art Sentry to provide superior services relative to the
other service providers. The downside to this is in order for the business to realize the competitive
advantage, it must remain small and focused. The revenue forecasts indicate that The Art Sentry
will develop sufficient profitability while remaining very focused.

Page 10
 The Art Sentry

3.6 Strategy Pyramids

The single objective is to position The Art Sentry as the premier art collection service provider. The
marketing strategy will seek to create customer awareness regarding the services offered, develop
the customer base, and work toward building customer loyalty and referrals.

The message that The Sentry will seek to communicate is that they offer a superior service for
artwork that is not offered anywhere else. The first method of communication will be
advertisements, specifically, in the Yellow Pages.

The second method of communication is a concerted networking campaign. Networking will be an

effective activity in light of the fact that the community of customers is close knit. The networking
activities will be specific to the different customers that The Sentry will target.

3.7 Marketing Mix

The Art Sentry's marketing mix is comprised of the following approaches to pricing, distribution,
advertising and promotion, and customer service.

• Pricing: The Sentry will be charging a fair price for its services, however, the market it
serves is somewhat price insensitive. This is due to two factors, the luxury (non-essential)
aspect of high-end art collections, and the lack of true competition.
• Distribution: Services will be provided at the customer's home or business.
• Advertising and Promotion: Advertising and networking will be used.
• Customer Service: The Art Sentry business model is based on a customer-centric
philosophy, ensuring that customer's expectations are not only met but exceeded.

3.8 Marketing Research

The Art Sentry has undertaken an informational marketing research campaign to gain insight into
customer preferences, alternative service providers, and sources of information that customers
have for obtaining service providers.

Over a three-month period, Dan visited art galleries to obtain the previously mentioned
information. Taking the time to chat with the different galleries was quite useful in gaining
customer insight. While some of the information gained was new and added value to both the
business and marketing plan, a lot was already known and served to confirm already held
assumptions.

4.0 Financials, Budgets, and Forecasts

This section will offer a financial overview of The Art Sentry as it related to the marketing activities.
The Sentry will address break-even analysis, sales forecasts, expenses forecasts, and how these
activities link to the marketing strategy.

Page 11
 The Art Sentry

4.1 Break-even Analysis

The break-even analysis indicates that $3,368 is needed in monthly revenue to break-even.

Break-even Analysis

$3,000

$2,000

$1,000

$0

($1,000)

($2,000)

($3,000)

($4,000)
$0 $1,170 $2,340 $3,510 $4,680 $5,850

Monthly break-even point

Break-even point = where line intersects with 0

Table 4.1: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 52
Monthly Sales Break-even $3,368

Assumptions:
Average Per-Unit Revenue $65.00
Average Per-Unit Variable Cost $3.25
Estimated Monthly Fixed Cost $3,200

4.2 Sales Forecast

Sales for the first several months will be slow. It is expected that it will take time to build up
sufficient business, especially since The Art Sentry is using primarily grass root methods of
marketing. Business will begin to reach decent sales activity by month five, and grow steadily after
that. Profitability is forecasted to occur fairly quickly, but is a function of low overhead as The Art
Sentry is a home-based business. Revenues will reach $64,000 by the end of year three.

Page 12
 The Art Sentry

Monthly Sales Forecast

$5,000

$4,500

$4,000

$3,500

$3,000

$2,500 Residential

$2,000 Corporate

$1,500

$1,000

$500

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.2: Sales Forecast

Sales Forecast
Sales 2003 2004 2005
Residential $13,325 $24,300 $27,407
Corporate $17,767 $32,400 $36,543
Total Sales $31,092 $56,700 $63,950

Direct Cost of Sales 2003 2004 2005

Residential $666 $1,215 $1,370
Corporate $888 $1,620 $1,827
Subtotal Cost of Sales $1,555 $2,835 $3,198

4.3 Expense Forecast

Marketing expenses are budgeted to be fairly high during the first quarter of operation. This will
accomplish the goal or increasing visibility and awareness about the different services. Expenses
will settle down a bit until the fall when they will increase again. Fall is typically a more active time
for art purchases and The Sentry will want to again build awareness during this active period.

Page 13
 The Art Sentry

Monthly Expense Budget

$500

$450

$400

$350

$300

$250 Advertisements

$200 Networking campaign

$150

$100

$50

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table 4.3: Marketing Expense Budget

Marketing Expense Budget 2003 2004 2005

Advertisements $2,150 $3,000 $4,000
Networking campaign $2,350 $3,200 $4,100
------------ ------------ ------------
Total Sales and Marketing Expenses $4,500 $6,200 $8,100
Percent of Sales 14.47% 10.93% 12.67%
Contribution Margin $25,038 $47,665 $52,653
Contribution Margin / Sales 80.53% 84.07% 82.33%

Page 14
 The Art Sentry

5.0 Controls

The purpose of The Art Sentry's marketing plan is to serve as a guide for the organization. The
following areas will be monitored to track progress:

• Revenue: monthly and annual.

• Referrals.
• Customer satisfaction.

5.1 Implementation Milestones

The following milestones identify the key marketing programs. It is imperative that the different
tasks are accomplished on time and on budget.

Milestones

Marketing plan completion

First residential customer

First major corporate account

Profitability

Jan Feb Mar Apr May Jun Jul Aug Sep

Table 5.1: Milestones

Milestones Plan
Milestone Start Date End Date Budget Manager Department
Marketing plan completion 1/1/03 2/1/03 Dan
First residential customer 1/1/03 2/28/03 Dan
First major corporate account 1/1/03 5/30/03 Dan
Profitability 1/1/03 9/30/03 Dan
Totals $0

Page 15
 The Art Sentry

5.2 Marketing Organization

Dan will be responsible for the different marketing efforts.

5.3 Contingency Planning

Difficulties and Risks

• Problems generating visibility.

• Less customer demand than forecasted.
• The entry of a similar service level competitor.

Worst Case Risks Include

• Determining that the revenue is insufficient to support Dan full time.

• Lawsuit due to a client-related accident or negligence.

Page 16
 Appendix: The Art Sentry
Table 4.2 Sales Forecast

Sales Forecast Plan

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Residential $0 $410 $495 $559 $900 $1,241 $1,276 $1,423 $1,490 $1,684 $1,824 $2,025
Corporate $0 $546 $660 $745 $1,200 $1,654 $1,701 $1,897 $1,987 $2,245 $2,432 $2,700
Total Sales $0 $956 $1,155 $1,304 $2,100 $2,895 $2,977 $3,320 $3,477 $3,929 $4,256 $4,725

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Residential $0 $20 $25 $28 $45 $62 $64 $71 $75 $84 $91 $101
Corporate $0 $27 $33 $37 $60 $83 $85 $95 $99 $112 $122 $135
Subtotal Cost of Sales $0 $48 $58 $65 $105 $145 $149 $166 $174 $196 $213 $236

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 Appendix: The Art Sentry
Table 4.3 Marketing Expense Budget

Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Advertisements $150 $175 $200 $225 $200 $175 $150 $125 $150 $175 $200 $225
Networking campaign $175 $200 $200 $225 $200 $175 $175 $150 $175 $200 $225 $250
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $325 $375 $400 $450 $400 $350 $325 $275 $325 $375 $425 $475
Percent of Sales 0.00% 39.25% 34.63% 34.52% 19.05% 12.09% 10.92% 8.28% 9.35% 9.55% 9.99% 10.05%
Contribution Margin ($325) $533 $697 $789 $1,595 $2,400 $2,503 $2,879 $2,978 $3,357 $3,618 $4,014
Contribution Margin / Sales 0.00% 55.75% 60.37% 60.48% 75.95% 82.91% 84.08% 86.72% 85.65% 85.45% 85.01% 84.95%

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