SPREE WATCH MARKETING PLAN SUMMARY

Based on an evaluation of the watch market and our strengths, General will introduce the Spree watch.

SITUATION ANALYSIS

Half the buyers of branded fashion watches are between 18 and 34 years of age. This group, which purchases more
watches per capita than those older, is our primary market segment. Watch purchases are more likely by consumers
in the northeast and Midwest. Many purchases are expected to be impulse, requiring strong point-of-purchase support.
Seventy percent of the market is concentrated with strong competition from Swatch, Fossil, Guess?, and Anne Kline.
We have extensive experience in the manufacture of innovative, high quality, precision plastics and timing devices
permitting us to offer the consumer value in a branded fashion watch. Additionally, we have experience distributing
products into 75 percent of the outlets for branded fashion watches.

OBJECTIVES

The combination of a unique, cost-effective design allows us to establish a three percent market share in the first year.
The Spree watch project will break-even in 1998.

MARKETING STRATEGIES

General will introduce a new product, the innovative Spree watch, using penetration pricing, extensive advertising,
and expanded distribution in order to increase our revenues and growth rate.

ACTION PLAN

The Spree watch has strong product benefits compared to current market offerings. To achieve our objectives, we will
offer our unique watch in a variety of designs at a suggested retail price of $45. Our current distribution covers 75
percent of the market. At this time, we will not expand our distribution to access the jewelry store retail channel. We
will increase our sales force by 5 persons and add a sales trainer to support for our market plan. Advertising of one
million dollars will emphasis the unique design of the watch and is weighted toward print and point-of-purchase
displays. This and television advertising will be scheduled two-thirds in the first six months of the campaign. To
achieve consumer awareness in the first year, our advertising voice share will be considerably higher than that of the
four market leaders.

FINANCIAL ANALYSIS AND EXPECTED RESULTS

We expect first year sales of 8.5 million dollars and project break-even for the project in the first year.

CONTINGENCY PLANS

If the competition increases advertising or our sales are less than expected, we are prepared to add as much $500,000
to our advertising budget.
 SPREE - THE MARKET PLAN
SITUATION ANALYSIS

General's core business is industrial timing devices and consumer clocks, based on skills in
manufacturing high quality timing movements and plastic casings. This market plan is based on
providing consumers with a high quality, innovative watch. It will be offered in a variety of
styles for both men and women. The casing and movement have other potential applications not
discussed in this plan.

Our 1995 profits of 30 million dollars represent 7.5 percent of total sales. Sales growth has
slowed to a current level of 5 percent annually. Growth in current markets is expected to be
limited. The Spree watch is one of several projects with the potential to improve General's
growth rate.

Market Analysis

The Spree watch will compete directly with several other branded fashion watches. The market
size for branded fashion watches is forecast to be $524 million retail dollars in 1998, growing to
$721 million by 2002. Annual market growth is expected to exceed six percent through 2002,
exceeding our current annual sales growth.

Market Segments

Table 1: Market Segments by Age

AGE PERCENT PERCENT OF Those under 35 years of age purchase slightly

RELATIVE
OF WATCH POPULATION over 50 percent of all branded fashion watches as
PURCHASE
BUYERS OVER 17 INDEX
shown in the Table 1. The highest purchase
18-24 19% 13% 1.46 prevalence is those from 25 to 34 who purchase
74 percent more watches per capita than those
25-34 33 19 1.74 the average consumer. Purchase behavior is

expected to differ among age segments and by

35-54 35 40 0.88
gender. Young females [18-24 years of age] are
55+ 13 29 0.45
expected to be intense purchasers. This group is
likely to be very styling conscious. Women in the
25 to 34 age group will be our second significant
segment, expected to buy more watches than any other age-sex segment.

Consumer purchases of branded fashion watches also vary by region as shown in Table 2. An
index of relative watch sales by regions shows that sales are above average in the east north
central, west north central, north central, and midatlantic states. Product introduction is likely to
be more successful in the states in these regions.
Table 2: Watch Sales by Region
REGION WATCH SALES POPULATION INDEX OF Consumer Behavior
WATCH
SALES
%
Swatch has changed watch buying habits by
ENC 20% 15% 1.33
encouraging ownership of multiple low-priced,
SA 16 17 0.94 carefully designed branded fashion watches. Brand
MA 15 13 1.15 switching and experimentation by consumers is easy
WEST 15 21 0.71
for low priced watches, assuming availability.
Consumers are very design oriented when buying
WSC 10 10 1.00
branded fashion watches. Watch attributes that we
WNC 8 7 1.14 consider most important include watch and band
NE 6 5 1.20 design, packaging, price, and durability. Distribution
ESC 5 6 0.83
and display are very important in this market and
can encourage impulse purchases for both personal
MOUNT 5 6 0.83
use and as gifts.

Consumers are reached through five types of outlets... We currently have access to four of these
channels, representing 75 percent of watch sales. Channel development is necessary to reach the
total watch market. A majority of branded fashion watches are currently purchased at department
stores. We will take advantage of our strong distribution through department, discount, and drug
stores to assure widespread availability of Spree watches. Jewelry store channel development
will be deferred until we are established in our traditional retail channels.

Competitive Analysis

Although there are fourteen competitors in this market, there is substantial concentration.
Swatch, Fossil, Guess?, and Anne Kline are strong competitors, holding 70 percent of the
market. Swatch and Fossil have strong manufacturing and distribution skills, while Guess? and
Anne Kline have less extensive distribution networks but strong name recognition in fashion.
Fossil and Swatch are strong at the lower price lines. Branded fashion watches are a relatively
new product category. Although pioneered by Swatch, there is considerable opportunity for new
entrants as demonstrated by Fossil and Guess?.

Company Analysis

General currently distributes products through channels accounting for 75 percent of watch sales.
Branded fashion watch sales are growing faster than our current product lines. Our innovative
product, product design skills, strong manufacturing skills, and experience in distributing
consumer clocks provide an opportunity for entry and growth in this market.

SWOT Analysis

Strengths

 Innovative production methods provide the potential for new designs

  Experience in distribution channels for timepieces

Weaknesses

 No experience in distribution to jewelry stores

 No experience in marketing fashion products

Opportunities

 Large market

 Market growing faster than our current sales

 Consumer demand for fashion goods creates a demand for innovative products

Threats

 Strong competition with concentrated market shares

 Possibility of new market entries

OBJECTIVES

 Market share of three percent of the branded fashion watch market in the first year [sales of over
8 million dollars].
 Project break-even in 1998.

MARKETING STRATEGIES

General will introduce a new product, the innovative Spree watch, using penetration pricing,
extensive advertising, and expanded distribution in order to increase our revenues and growth
rate.

ACTION PLAN

Product

We will introduce between 30 to 40 different designs in the first year. One quarter of these will
have a "metal" case, copying many of the traditional and modern metal designs. These are
targeted at consumers 25 and over. We will design a series including licensed characters and
unusual shapes for the market segment under 24 years of age. Swatch does not have exclusive
licensing for Disney and Warner Brothers characters or Coke. By using these and others we will
have a variety of product and character designs in our line. The most unusual aspect of our line
will be some very unusual shapes. Several of these will be geometric; hexagon, trapezoid, oval,
and diamond. For younger ages our technology allows the design of watches in the shapes of
cartoon character faces.

Price

The Spree watch will be sold for a suggested retail price of $45. We believe that we have product
quality and feature advantages, encouraging the use of a price slightly exceeding Swatch. This
pricing strategy, coupled with our efficient production methods, aids in achieving our relatively
high market share for a new product entry.

Distribution

We will introduce Spree in the northeast but within the first year sell to the national market. With
our current strong distribution channels nationwide covering 75 percent of watch sales, we will
limit our potential if we restrict our distribution to specific regional markets. Although we do not
currently have jewelry stores, our distribution will place watches in at least 75 percent of
locations in the United States. We will use current normal distributor markups.

Promotion

Five new sales representatives will be added to assist in the development of new distribution
outlets. A sales trainer will be hired to train the sales force in the new product. This will be
within our $500,000 sales support budget based on an average salary and benefits cost of
$100,000 for each position.

The advertising level for the four leading firms can be compared by determining the ratio of
voice share (% of total advertising dollars of $20 million) divided by the market share as shown
in Table 3. Consumers will not know our brand; therefore, we will have to advertise more
aggressively to achieve brand awareness. Although our market share goal in 1998 is three
percent, we will set advertising at one million dollars. This will achieve an advertising
voice/market index considerably higher than our competition.

Table 3: Fashion Watch Advertising and Voice

COMPANY MARKET VOICE VOICE/ ADVERTISING

SHARE SHARE
MARKET MILLION $

SWATCH 20% 28% 1.4 5.5

FOSSIL 20% 24% 1.2 4.8

GUESS? 20% 21% 1.05 4.2

 ANNE 13% 13% 1.9 2.5
KLINE

SPREE 3% 5% 5.0 1.0

PLAN [assumes
same level
of total
advertising
as last year]

Media will be targeted to our major market segments; women between 18 and 24 and between 25
and 34. Smaller amounts will be directed to other segments.

FINANCIAL ANALYSIS AND EXPECTED RESULTS

As shown in Tables 1 and 2 of the financial appendix, we expect to achieve a market share of
three percent and sales of $8.5 million in the first year. The Spree watch project will break-even
in the first year. We do not expect any watch technology breakthroughs during this period.
Competition is expected to be based on design, price, and achieving widespread distribution,
areas in which we expect to be very competitive.

In conclusion, we will invest one million dollars in the Spree watch project. We can achieve
sufficient market share to achieve our financial and marketing objectives. During the next five
years the market is expected to grow and our costs are expected to decline with experience
increasing unit contribution. Our greatest challenge will be tracking the market's tastes in watch
design and meeting and leading these with creative and innovative designs.

CONTINGENCY PLANS

Table 4: Impact of Advertising Levels on Financial Results

TOTAL AD BREAK EVEN NET PRESENT It is not expected that there will be increased price
BUDGET YEAR VALUE IN MIL. $
competition due to the entry of the Spree watch.
$2,500,000 1998 $35.8
3,000,000 1999 34.0
Increased advertising, however, might lead to an
3,500,000 1999 30.4 increase in industry advertising. A sensitivity
4,000,000 1999 28.6 analysis of the effect of increased advertising on
our break-even year and cumulative profits appears
in Table 4. Increases in advertising in steps of an additional $500,000 dollars up to $4 million,
assuming no additional gains in market share, have fairly limited effect on our performance.
Therefore, in the event that there is increased industry advertising, we are prepared to increase
our advertising by as much as $1,500,000 annually. Our increase advertising also will allow us to
react to lower than expected consumer awareness, fewer distribution outlets than planned, or less
than expected consumer acceptance of Spree watch.
FINANCIAL APPENDIX
TABLE 1: PRO-FORMA INCOME STATEMENT AT $50 PRICE

CURRENT YEAR 1997

BEFORE
RESEARCH & DEVELOPMENT RELEASE $50.00 SUGGESTED RETAIL PRICE
INVESTIGATION COSTS $250,000 $12.50 LESS RETAIL DISCOUNT (25%)
DEVELOPMENT COSTS $750,000 $37.50 PRICE TO RETAIL
DISCOUNT RATE PER YEAR 12.00% $7.50 LESS WHOLESALE DISCOUNT (20%)
$30.00 MFG SELLING PRICE

ANNUAL COSTS AND SALES 1998 1999 2000 2001 2002

PRODUCER'S PRICE PER UNIT $30.00 $30.00 $30.00 $30.00 $30.00
VAR COSTS PER UNIT $15.00 $14.00 $13.50 $13.25 $12.00
FIXED COSTS PER YEAR $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
RETAIL SALES FORECAST [MIL $] $524 $574 $616 $672 $721
INDUSTRY SALES PER YEAR [UNITS] 10,480,000 11,480,000 12,320,000 13,440,000 14,420,000
COMPANY MARKET SHARE [UNITS] 2.00% 4.00% 6.00% 8.00% 10.00%
COMPANY SALES PER YEAR [UNITS] 209,600 459,200 739,200 1,075,200 1,442,000

BEFORE
INCOME STATEMENT RELEASE 1998 1999 2000 2001 2002
SALES REVENUES $6,288,000 $13,776,000 $22,176,000 $32,256,000 $43,260,000
VARIABLE COSTS $3,144,000 $6,428,800 $9,979,200 $14,246,400 $17,304,000
FIXED COSTS $1,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
PROFITS ($1,000,000) $1,144,000 $5,347,200 $10,196,800 $16,009,600 $23,956,000
CUMULATIVE PROFITS $144,000 $5,491,200 $15,688,000 $31,697,600 $55,653,600
NET PRESENT VALUE $35,309,732
TABLE 2: PRO-FORMA INCOME STATEMENT AT $45 PRICE

CURRENT YEAR 1997

BEFORE
RESEARCH & DEVELOPMENT RELEASE $45.00 SUGGESTED RETAIL PRICE
INVESTIGATION COSTS $250,000 $11.25 LESS RETAIL DISCOUNT (25%)
DEVELOPMENT COSTS $750,000 $33.75 PRICE TO RETAIL
DISCOUNT RATE PER YEAR 12.00% $6.75 LESS WHOLESALE DISCOUNT (20%)
$27.00 MFG SELLING PRICE

ANNUAL COSTS AND SALES 1998 1999 2000 2001 2002

PRODUCER'S PRICE PER UNIT $27.00 $27.00 $27.00 $27.00 $27.00
VAR COSTS PER UNIT $15.00 $14.00 $13.50 $13.25 $12.00
FIXED COSTS PER YEAR $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
RETAIL SALES FORECAST [MIL $] $524 $574 $616 $672 $721
INDUSTRY SALES PER YEAR [UNITS] 10,480,000 11,480,000 12,320,000 13,440,000 14,420,000
COMPANY MARKET SHARE [UNITS] 3.00% 5.00% 8.00% 10.00% 11.00%
COMPANY SALES PER YEAR [UNITS] 314,400 574,000 985,600 1,344,000 1,586,200

BEFORE
INCOME STATEMENT RELEASE 1998 1999 2000 2001 2002
SALES REVENUES $8,488,800 $15,498,000 $26,611,200 $36,288,000 $42,827,400
VARIABLE COSTS $4,716,000 $8,036,000 $13,305,600 $17,808,000 $19,034,400
FIXED COSTS $1,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
PROFITS ($1,000,000) $1,772,800 $5,462,000 $11,305,600 $16,480,000 $21,793,000
CUMULATIVE PROFITS $772,800 $6,234,800 $17,540,400 $34,020,400 $55,813,400
NET PRESENT VALUE $35,823,504

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