Shoe Skins

1. Shoe Skins Customer-Driven Feasibility Study Bristol, Cuozzo, Holz, Lyman, Patibandla, Sexton

2. Executive Summary: Shoe Skins • Research Performed and Customer Pain. • Shoe Skin System, Benefits, Target Market • Macro-Market analysis • Macro-Industry analysis • Key Lessons and Conclusion Shoe Skins is a unique system that makes footwear fun by allowing children to easily change the look of their shoes any time they want.

3. Child and Parent Interviews • “I like clothes and styles that nobody else has. “ • Phoebe (Age 7) • “At school, you don’t like to be the same. You want to stand out.” Vika (age 11) • “Being different makes me feel good.” • Colin (age 8)

4. Children’s Shoe Buying Survey • 90% of parents said kids influence their shoe buying decision. • 95% of parents said they buy kids shoes because kids outgrow the old ones. • Sneakers are the most popular shoes.

5. Who are the customers? Who is seeking the benefit? • Boys and Girls • Ages 5-12 yrs • Friends important • Very active (sports, dance, etc.) • Parents / Extended Family • Want their kids to be happy • Save money on multiple shoe purchases • As a gift or treat (Skins especially) Who else would buy? • Organizations • Marching Bands • Cheerleading Teams • Sports Teams • Companies • Access to a large target market to extend their brands. • Promotional opportunities such as give-aways.

6. Customer Pain Kids: More choices and styles with their shoes. Parents: Having to buy multiple shoes for kids.

7. Benefits of the Shoe Skin Solution Benefits High “cool” factor with something new and innovative Offers individuality and self-expression The Shoe Skin System Variety of colors and styles Green: less shoes, recyclable skins Online social network Ability to share, collect, and trade skins Fun online games and activities Cost effective – less need for other shoe purchases.

8. Related Offerings and Expansion Possibilities Color, and pattern options truly endless. Unique designs, match with outfit Fitness tracking: GPS, Pedometer Limited Editions from artists Licensing potential Accessories (matching Laces, pin) Add-ons such as noises, LEDs

9. SECONDARY SOURCES Pricing of existing novelty shoe offerings: Customizable Converse sneakers: $58 - $95 Heelys: $43 - $80 Crocs: $20 - $40; Jibbitz (clip-on decorations) $3 - $6 Sneakart stickers: $12-$14 PRIMARY SOURCES All parents interviewed would pay $30 for the shoe skin system. 40 parents surveyed on typical price paid for a pair of children's shoes: < $25 35.9% $25-$35 43.6% $35-$50 17.9% > $50 2.6% Potential Pricing These data support a price of about $30 for the Shoe Skins system.

10. Target Market • Benchmark shoe accessories • Jibbitz ** • Feb 06 sales: $212K • Aug 06 $2.2M • Target Market: 5-12 YO • Est. 36M age 5-12 in 2008 * • 68% of the total $6.2B children’s footwear market • $4.2B in 2009 for this age • Benchmarks: • Heely’s: $186M US sales in 06’ • Croc’s: $366M US sales in 08’ • * US Census • ** Oct 06 sold to Crocs for $20M

11. Market Segmentation Market A Market B 5-8 years 9-12 years

12. Macro Market Size • Children’s Accessories • Market Size in Value Sales: $2.6 Billion* • Difficult to estimate kids’ shoe accessory segment • Competing with all types of accessories • Growing at roughly 3% per year Children’s Footwear Market Size in Value Sales: $6.2 Billion* • Expected to grow at 1.9% during year 2006-11 • Children’s market represents 13% of overall US footwear market • Both Children’s and Women’s footwear market is expected to grow at a faster rate compared to Men’s market *2009, Euromonitor International *2006, Euromonitor International

13. Macro Trend Analysis Summary

14. Macro Market Summary Overall Assessment: ModeratelyFavorable • Footwear is a necessity • Must be replaced often • Large customer base • Slow but steady growth • Opportunity for focused online marketing • Favorable social trends towards re-usable products

15. Industry Attractiveness SUPPLIERS Low NEW ENTRANTS Moderate SUBSTITUTES High BARRIERS TO ENTRY Moderate RIVALS High BUYERS Large Chains: High Small Retailers: Moderate Online: Low ?

16. Industry Trends Summary Assessment: Low Attractiveness • Consolidation among wholesalers and retailers • Discount stores surpassing specialty footwear outlets • Retailers beginning to bypass wholesalers • Implications Innovative products can find success (e.g., Crocs, Heelys) • Must be even more thoughtful about strategy • Design strategy (IP) • Channel strategy

17. Conclusion In summary… • Kids want variety; parents want value • Appetite for customization • Market is moderately attractive • Industry is unattractive • Will continue to research micro market to strengthen our value proposition • Business model development will be crucial to overcome industry unattractiveness

18. Appendix

19. Benefits over other solutions CROC Jibbets Custom Converse SNEAKART • Cool styles, make your own styles. • Use with any shoe. • Strong word-of-mouth. • Loyal customer base • Established brand. PROS • Break easy • Warm weather only, limited activities • Hard to Adhere • Fall off easy • Difficult online setup • Limited to colors. CONS • Many styles, accessories • Share and swap. • Online social network • Many activities • Any season, any weather. • Easy to attach, remove • Durable SS BEN

20. Shoe Skins Shoe Skins is a unique system that makes footwear fun by allowing children to easily change the look of the their shoes any time they want. The Shoe Skin System Web site mock-up

21. The System • The Shoe Skins system comprises a base model casual shoe (or line of shoes) plus a removable “skin,” such as those available for laptops and cell phones. • The skin will affix to a special surface on the shoe. • Shoe Skins will be sold separately in many different colors and patterns and contain robust potential for licensing opportunities.