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ACME Inc. Q4 2010 Executive Update
                                                      Market Analysis
ACME Inc. Q4 2010
Executive Update
Prepared by the Executive Steering Committee
under the Leadership of James White, CFO

Executive Summary
ACME Inc. faces an important new challenge. Our
privileged position as the premier name in
                                                      The worldwide market for musical instruments is a
high‐quality musical instruments, the choice of the   very mature, very competitive market. Overall market
concert professional, is threatened by new            growth is estimated between 6% and 8% per year, in
technology. Electronic alternatives become more       both units and value. Distribution patterns vary a
important every day. Yet our most important product   great deal by segment, from the mass retail
line, acoustic instruments, is addressing the
                                                      distribution of the low end to the specialized
slowest‐growing market segment in the industry.
                                                      distribution of the high‐ quality and high‐price
                                                      segments. ACME Inc. operates in a narrow part of
                                                      the market; instruments and equipment are sold to
                                                      professionals who insist on the highest‐quality
                                                      sound. Most of our customers are concert musicians.

                                                      Market Forecast
                                                      The market forecast shown here refers to the segment
                                                      of the market relevant to ACME Inc., which is of course
                                                      the very high‐quality professional music segment. The
                                                      acoustic instruments segment, our most important
Our answer to this challenge is change and            market segment, is expected to grow at a very slow 2%

development. This 5‐year business plan guides
ACME Inc. through the transition to new
technology. We will continue to develop and
expand our position in keyboards, speakers, and
related electronic equipment, while slowly reducing
our present dependence on acoustics.

Our new plan is ambitious. We expect a
dramatic increase in sales and profits, as shown
in the chart Business Plan Highlights. Greater
growth rates are expected for keyboards,
speakers, and electronic equipment, all of which
grow between 10% and 20% per year.



Company Confidential                                                             June 4, 2010
ACME Inc. Q4 2010 Executive Update
per year through 2012. Greater growth rates are
expected for keyboards, speakers, and
electronic equipment, all of which grow between
10% and 20% per year.

Business Strategy & Implementation
We must walk a difficult tightrope to adapt our
business to new technologies, without losing our
stronghold among professional musicians. We will
need to let our market share drop a bit in the
slow‐growth acoustics segments of the market, while
we significantly increase our share in keyboards,
speakers, and other electronic equipment. We want to
maintain continuity and tradition even while the
industry sorts itself out with changes in market and
technology. There will always be a traditional
segment, and ACME Inc. will always be there.

Business Strategy & Implementation
Our strategy focuses on key opinion leaders to
maintain our position in the traditional music
sector, while simultaneously developing new
technologies that will protect our long‐term position
and may eventually lead us to new markets:

       We must maintain positioning as a traditional
       and high‐quality manufacturer, playing to our
       strengths and away from our weaknesses.
       Where possible, we must position our
       marketing communications to emphasize
       good relations with specialty media and
       opinion leaders. Programs like the
       endorsement program, including
       give‐away units, are most important. We
       need to keep our name and reputation in
       the minds of the true professionals.
       We will continue to maintain focused high‐
       prestige channels in a few major cities. Our
       customers know and respect our channels.




Company Confidential                                    June 4, 2010

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  • 1. ACME Inc. Q4 2010 Executive Update Market Analysis ACME Inc. Q4 2010 Executive Update Prepared by the Executive Steering Committee under the Leadership of James White, CFO Executive Summary ACME Inc. faces an important new challenge. Our privileged position as the premier name in The worldwide market for musical instruments is a high‐quality musical instruments, the choice of the very mature, very competitive market. Overall market concert professional, is threatened by new growth is estimated between 6% and 8% per year, in technology. Electronic alternatives become more both units and value. Distribution patterns vary a important every day. Yet our most important product great deal by segment, from the mass retail line, acoustic instruments, is addressing the distribution of the low end to the specialized slowest‐growing market segment in the industry. distribution of the high‐ quality and high‐price segments. ACME Inc. operates in a narrow part of the market; instruments and equipment are sold to professionals who insist on the highest‐quality sound. Most of our customers are concert musicians. Market Forecast The market forecast shown here refers to the segment of the market relevant to ACME Inc., which is of course the very high‐quality professional music segment. The acoustic instruments segment, our most important Our answer to this challenge is change and market segment, is expected to grow at a very slow 2% development. This 5‐year business plan guides ACME Inc. through the transition to new technology. We will continue to develop and expand our position in keyboards, speakers, and related electronic equipment, while slowly reducing our present dependence on acoustics. Our new plan is ambitious. We expect a dramatic increase in sales and profits, as shown in the chart Business Plan Highlights. Greater growth rates are expected for keyboards, speakers, and electronic equipment, all of which grow between 10% and 20% per year. Company Confidential June 4, 2010
  • 2. ACME Inc. Q4 2010 Executive Update per year through 2012. Greater growth rates are expected for keyboards, speakers, and electronic equipment, all of which grow between 10% and 20% per year. Business Strategy & Implementation We must walk a difficult tightrope to adapt our business to new technologies, without losing our stronghold among professional musicians. We will need to let our market share drop a bit in the slow‐growth acoustics segments of the market, while we significantly increase our share in keyboards, speakers, and other electronic equipment. We want to maintain continuity and tradition even while the industry sorts itself out with changes in market and technology. There will always be a traditional segment, and ACME Inc. will always be there. Business Strategy & Implementation Our strategy focuses on key opinion leaders to maintain our position in the traditional music sector, while simultaneously developing new technologies that will protect our long‐term position and may eventually lead us to new markets: We must maintain positioning as a traditional and high‐quality manufacturer, playing to our strengths and away from our weaknesses. Where possible, we must position our marketing communications to emphasize good relations with specialty media and opinion leaders. Programs like the endorsement program, including give‐away units, are most important. We need to keep our name and reputation in the minds of the true professionals. We will continue to maintain focused high‐ prestige channels in a few major cities. Our customers know and respect our channels. Company Confidential June 4, 2010