Executive Summary: The Converse Corporate Mission is rooted in the idea of understanding the past, living the present

and creating the future:

Everyone has a history-an account of the things theyve done in the time theyve been around. We think of ours as a bunch of cool stories that have led us to where we are and will show us where well go. Weve also been around long enough to learn its not about how old you are but how good you are, and that the best stories are the ones that you just keep adding to and adding to all the while marveling at the creative, disruptive, optimistic, courageous ways things evolve from being what they were, to what they will become.

Today, a wholly owned subsidiary of NIKE Inc., we still strive to be as visionary in our creations as Marquis Mills Converse was when he decided to trust his gut and venture beyond what was known. We encourage independent individuals everywhere to do the same through the things we make and the reasons why. Our product assortment includes mens and womens clothing, accessories, eight primary collections of shoes, and six specialty shoe categories. This plan focuses on domestic and international growth through the footwear product lines for fiscal year 2012 (June 1, 2011 through May 31, 2012) and for 2015. Converse plans to grow the US Market Share from 3% to 3.5% and Global Market Share from 1.5% to 1.8% over the next year. The key elements for US Market Growth will focus on growing the four (4) major target markets; teenagers, artists, basketball players and skateboarders. Considerable effort will be placed on growing the U.S. basketball and skateboarding segments to 10% and 25% respectively and globally to 3% each by 2015, through promotional events around the globe. We will also increase domestic and global awareness of the Converse brands using our newly opened Rubber Tracks recording studio. The key elements for global growth will be achieved through our Direct-to-Consumer digital marketing initiatives and future plans for international Converse retail stores. Focus will be on China, Brazil, India, and Russia. Based on the size of our market and our defined market area, our global sales forecast for footwear in 2012 is $1.04 billion and $728 million for the U.S. A footwear marketing budget of $88 million has been projected (Appendix A) for fiscal year 2012, which accounts for 10% of last years revenues. The social media budget accounts for 90% of the total plan and will be leading the charge into the future. Situation Analysis: Strengths: Customer Loyalty: Converse has been able to build a loyal customer base through offering footwear that is both unique and highly functional. Management: Geoff Cottrill was announced as the new Chief Marketing Officer (CFO) on November 7, 2007. Mr. Cottrill comes from a long history with Procter & Gamble, Coca-Cola and Starbucks. Cotrill plans to hire a new position (Customer Experience (VP). Target Market: Converse has a diverse market of consumers including children, fashion designers and athletes. Financial Position: Converse has a strong financial position since it was purchased by Nike in 2003; it is the top performing subsidiary of NIKE. Product Portfolio: We have a diverse portfolio including premium lifestyle mens and womens footwear and apparel. Price: Converse footwear has always been an affordable shoe that is priced competitively. Durability: Athletic shoes are built with quality materials to provide required support for the sport they are designed for. Wide Geographic coverage and Strong Distribution Channels: Converse offers a diverse portfolio of products that are sold in over 130 countries

Retailer Relationships: Has built strong relationships with domestic retailers (e.g. J.C. Penny and Foot Locker) and is expanding these quality relationships globally Weaknesses: Manufacturing Changes: In 2003 the soles for older model shoes like the All Star were modified from their original design: no longer 100% rubber base, stitching was changed and the tongue was changed from a two-ply to a single ply of canvas. Manufacturing Location: In 2003 NIKE moved the entire All Star production operation to Asia for cheap labor which forced them to remove the Made in USA stamp. Weak Product Innovation: Low product innovation since they have a price point to hit. Opportunities: Increased Awareness: With our new Rubber Tracks Recording Studio, Basketball Courts and Skateparks, we will grow our domestic market share for various market segments International Growth: Ability to grow international business in emerging markets. As of right now there are no converse stores internationally which leaves opportunity for growth on converse stores and outlets; NIKE can help with initial distribution. Social Media: There is a completely open floor in the area of Social Media and we can position ourselves to capitalize on this market (domestically and internationally). Threats: Technology: In the athletic shoe market there are rapid changes in technology and we do not have the R&D department that we once had Consumer Demand: There are constant changes in consumer preferences due to changes and new innovations; so we have to stay diligent. Variable Costs: Increases in transportation, labor and materials (e.g. rubber) costs. Competition: Intense competition in both the United Stated and Internationally in footwear industry. Competitors: Strong competition for market share from Adidas, K-Swiss and Vans. Counterfeiters: Foreign manufacturers earn a lot of money by producing fake Converse footwear products, Company Description: Converse originated in 1908 as the Converse Rubber Company in Malden, Massachusetts and produced the worlds first basketball sneaker in 1917, the Converse All Star. As an endorsement, Chuck Taylor, the famous basketball pioneer, began promoting the sneaker that was later labeled the Chuck Taylor All Star. Converse continued to seek endorsements through individual sports stars and globally recognized associations such as the Olympic Games and National Basketball Association (NBA). This has helped them become one of the most recognized athletic shoe brands known around the world today, sold in more than 130 countries. Converse Inc. was purchased by Nike in 2003 and is run as a wholly owned subsidiary. The collaboration between Nike and Converse is proving to be extraordinary for both firms. Converse offers strong brand equity and uniqueness, while Nike can provide the technology and knowhow useful in keeping Converse front and center for both function and fashion. As of 2011, there have been more than 750 million pairs of the Chuck Taylor All Star sneakers sold, but other lines such as the Jack Purcell brand, One Star brand, various basketball and skateboarding shoes are also very popular and help maintain diversity within the company. Converse recently added to its more than 50 factory stores in the U.S. when it launched three (3) Converse retail stores in Boston, New York and North Andover, MA (location of headquarters). These stores help provide a personal touch to a brand that has helped put people in touch with themselves for many years. While Converse continues to sell its footwear through many third party retailers around the globe, we are shifting gears to a more direct-to-consumer approach both domestically and globally.

Although the Chuck Taylor shoe no longer qualifies as a basketball sneaker safe for the court, many individuals have used this iconic brand to help express themselves. Today, many of the Converse brands are fully customizable (including Chuck Taylor, One Star and Jack Purcell), but we also highlight certain popular graphics for our customers, such as those associated with classic rock bands (e.g. Pink Floyd) and Dr. Seuss. Converse still designs and makes basketball sneakers and skateboarding shoes for athletes. Converse has recently been involved with promotional strategies that support all of these lines, including hosting youth basketball events, opening a public skateboarding park and debuting a music recording studio in Brooklyn, NY. Marketing Objectives: Target Market Objectives: Market Share Grow Global Market Share from 1.5% to 1.8% by the end of 2012, and 2.5% by 2015. Grow US Market Share from 3% to 3.5% by end of 2012, and 5% by 2015. Segments (4 distinct) Increase each of the four (4) major segments: (Artists, Skateboarders, Basketball Players and Teenagers at the same rate and strive to achieve a 100% increase in sales in each segment in the Global Market by 2015. Grow skateboarding footwear U.S. market share from 18.5% to 19.5% by the end of 2012 and 25% by 2015.. Grow basketball footwear U.S. market share from 5% to 7% by the end of 2012 and 10% by 2015 Grow the Artist (e.g. musicians and fashion designers) U.S. market share from 5% to 6% by the end of 2012 and 8% by 2015. Grow the Teenager (male and female) U.S. market share from 2% to 3% by the end of 2012 and 5% by 2015. Channels (5 distinct) Increase Converse retail store sales by 50% for 2012. Increase Factory Store (51 locations) sales by 15% for 2012. Increase Website (direct to consumer) sales by 20% for 2012 . Increase Converse Footwear sales globally in Third Party Retailers by 3% for 2012. Increase Converse Footwear sales in Salvation Multi-Brand Stores (Combination of Hurley, Converse and Nike products (3 locations) by 50% for 2012. Satisfaction Obtain customer satisfaction of at least 95%. Retain 85% of the customers in 2012 as repeat customers in 2013. Promotional Objectives: Brand Awareness Utilize social networking to increase consumer awareness: o Increase Twitter followers by 15% for yearend 2012. (Currently 18,590 followers) o Increase Converse and Converse All Star fan base on Facebook each by 10% for 2012 (Currently almost 40 million fans) o Introduce ten (10) new videos on YouTube per quarter Host skateboarding and basketball events to drive brand awareness Traffic Building Use Rubber Tracks recording studio to increase awareness of Converse and Salvation Multi brand stores Increase Converse retail stores and Salvation multi-brand stores store traffic by 50% by 2012 Achieve a conversion rate of 50% for all retail stores Achieve a conversion rate of 25% for salvation multi-brand stores Achieve 80% conversion rate for online sales for products placed in the shopping cart

Achieve a 5% conversion rate for every customer that navigates through the Shop menu on the Converse website Channel/Distribution Objectives: Continue current distribution in all existing channels Convert to direct distribution in China by year end 2012 10% increase in distribution to emerging markets; China, Brazil, India and Russia by yearend 2012 Sell 100% of last seasons footwear inventory at factory locations and online Distribution of last seasons shoe line will be shipped to factory stores in the second week of each fiscal quarter. 60% of last seasons inventory will be shipped to factory stores with the remaining 40% to be sold via the website. Launch a website to China in March 2012 to start the transformation to direct to consumer market strategy Pricing/Inventory Objectives: Maintain current price points for each footwear product line and have a contingency plan to reflect increase in cost of goods, raw materials (rubber and cotton), labor, and transportation Target Markets: Converse offers eight (8) major shoe collections (see Pricing Strategy Section of this plan) and a variety of specialty low-production footwear lines, including Classic Chucks, Marimekko designs, Dr. Seuss designs, and Converse Americana. The footwear products have always been marketable to a diverse consumer base because of the unique colors and classic design, but the Design Your Own shoe concept, introduced a few years ago, takes us to a whole new level of marketability. Converse speaks to the individual, however we seek major growth from four (4) key segments: artists (e.g. musicians and fashion designers), skateboarders, basketball players, and teenagers. Appendix H identifies the distribution of our market segments by revenue. 1) Artists - The Artists segment is looking for a comfortable shoe that represents their uniqueness and artistic sense. This segment has really three (3) sub-segments, musicians, painters and fashion designers. Looking back in history many unique bands and artistic individuals wore Converse sneakers (mainly Chuck Taylor All Stars or Chucks), including Loverboy, Quiet Riot, Might Bosstones, Dead Boys, Voidoids, Curt Cobain, Sid Vicious and John Lennon. Converse can capitalize on this and market their product with images of icons wearing their gear. In past years, we have distributed special lines for specific bands, like Pink Floyd, The Who, and AC/DC. This has proven very successful, but this year we tried something different and created Dr. Seuss painted sneakers. These specialty shoes promote individuality and it encourages painters to use the Chuck Taylor canvas as their own. In 2000, we hired John Varvartos, an award winning mens designer, to launch his product line. He represents an entire lifestyle and has the line Converse by John Varvatos. This segment contributes to 15% of Converse footwear sales and we project U.S. market share growth from 5% to 6% by the end of 2012 and to 8% by 2015. Globally, this segment accounts for 20% of Converse footwear sales and we project market growth from 2% to 3% by 2015. 2) Skateboarders - The Skateboarding segment is looking for a functional, light weight, comfortable shoe that fits snug and breaths easily. Converse has invested a lot in this segment in recent years and will continue to manufacture their skateboarding line of shoes and market to this segment. This segment contributes 20% of Converse footwear sales and we project U.S. market share growth from 18.5% to 19.5% by the end of 2012 and to 25% by 2015. Globally, this segment accounts for 15% of Converse footwear sales and we project market growth of 2% to 3% 2015.

3) Basketball Players - The Basketball Player segment is looking for a durable, comfortable shoe that is reasonably priced and functional and easy to break in. This segment contributes 25% of Converse footwear sales and we project U.S. market share growth from 5% to 7% by the end of 2012 and to 10% by 2015. Globally, this segment accounts for 15% of Converse footwear sales and we project market growth of 2% to 3% by 2015. 4) Teenager - The teenager segment is looking for a fun, fashionable shoe that can be worn with a variety of outfits and are customizable and affordable. To meet the needs of this segment Converse will need to continue customize your own shoe along with their classics of Chuck Taylor All Star and One-star. This segment contributes 35% of Converse footwear sales and we project U.S. market share growth from 2% to 3% by the end of 2012 and to 5% by 2015. Globally, this segment accounts for 25% of Converse footwear sales and we project market growth of 3% to 4% by 2015. 5) Other - The Other segment constitutes the remainder of our consumer base which is too broad a segment to define more clearly. Our Other consumers are looking for a comfortable, durable, light-weight and affordable shoe that can be worn with a variety of outfits. To meet the needs of the rest of the market, Converse will need to continue to offer their classics shoe options; Chuck Taylor All Star, Jack Pucells, and One-Star at an affordable price point. This Other segment contributes 10% of Converse footwear sales and we project U.S. market share growth from 2% to 3% by the end of 2012 and 5% by 2015. Globally, this segment accounts for 25% of Converse footwear sales and we project market growth of 3% to 4% by 2015. Promotion Strategy: Converse Inc. will continue to utilize four (4) major forms of promotion, including advertising, sales promotion, public relations and personal selling, for the 2012 fiscal year. The Chief Marketing Officer (CMO), Geoff Cottrill, is well equipped to manage the skilled team of employees and ensure the maximum ROI from this years marketing budget. Appendix A highlights the marketing budget for 2012 and compares it to the money spent on promotional activities in 2011. The budget for footwear marketing this year is 10% of 80% (Footwear share of Converse) of the total revenue for fiscal year 2011 ($88 million). Overall, the advertising budget comprises 94% of the total marketing budget, with the major highlight for this year being a 30 percent (in U.S. Dollars) increase on spending for social media. We have decided to cut conventional television and billboard advertisements all-together this year, but we are keeping some cash for magazine ads and other types of advertisements, including banners linked to mass transportation and those in sporting arenas. Signage linked to mass transportation like subway signs and bus bench signs will attempt to maintain the core Converse followers and reach out to those consumers in the music, artistic and athletic segments, while the other avenues will be more focused on specific segments (both skateboarding and basketball). We will run one new advertisement every quarter in both Sports Illustrated and Thrasher Magazines. The social media budget, consisting of $79.2 million, is set aside to maximize market penetration within the younger segments. We will naturally grow our Facebook fan-base, increase our Twitter followers by fifteen (15) percent, support the Converse Blog (www.converseblog.com), introduce at least ten (10) new spots on YouTube each quarter and revamp our digital media distribution channel. Converse actively maintains two (2) independent Facebook pages, Converse and Converse All Star, each having close to twenty (20) million fans. In order to grow these pages

by ten percent each over this next year, Converse must continually post interesting conversation pieces and keep up to date with hot topics throughout the target marketing segments we are seeking. Converse has always prided itself on carrying products that speak to individuals and personal style. It is the companys commitment to this philosophy that will enable it to continue to grow in the social media channel. We bring conversation to the table and let the consumers do the talking. Approximately twenty (20) percent of this budget will be set aside to react spontaneously to viral topics that spread rapidly over the internet. Unique contests and targeted ads are imperative for keeping the interest of existing customers between purchases. It is our belief, that by keeping our current customers intrigued by our product, they will help double the Converse sales revenue by 2015. Twitter will remain the most important medium used to distribute information about the company quickly and also serve as a question-and-response channel for interviews with Converse event participants and star athletes. YouTube is used to both launch new products through advertisements (e.g. Kenny Andersons L.A. to Vegas short film) and capture any real-time experiences Converse has with its genuine fans. It is through this relatively new advertising channel that we feel we can reach the majority of our consumers. All of Converses promotional offers and public relations activities will be covered with this new media and distributed in real time to our fans. This will require a great amount of teamwork and effort from our marketing team, but properly managed, it expresses Converse with the uniqueness that its labels have always promoted. One other major enhancement to Converse digital media will be an overhaul of the Converse website (www.converse.com). In an effort to make the company website easier to navigate and less stressful for our consumers, we will spend nearly ten (10) percent of our budget de-cluttering our website. By September of 2011, all visitors to our website will be able to clearly separate the direct marketing features from the product distribution channel features. In order to help accomplish this task, we are close to hiring a new Customer Experience Vice President, who among other things, will ensure we meet our target online conversion rates (80% for products placed in shopping cart and 5% for customers show specific interest in Converse products). We have already contracted the firm to complete this project for us and the development schedule begins 1 July 2011. We anticipate a 20% increase in revenue through our website for 2012. Once the U.S. website is fully operational, we anticipate an international website launch to China in March of 2012. This will kick off our Direct-to-Consumer initiative for emerging markets (China, Brazil, Russia and India), planned for next several years. The remaining six percent of our budget this year will be spent on public relations, sales promotions, and personal selling. The direct marketing that is fostered by both our social media and public relations strategies enables us to cut back on personal selling tactics that were once necessary. We have budget set aside for maintaining our third party retail relationships globally, but we will not be pursuing any new retailers or any headlines for major sporting events like in years past. With our new retail locations, our Customer Experience VP will ensure that all of our sales staff is fully engaged in the Converse mission and understands what our consumers want. We will also be investing plenty of time and money into our own Converse sponsored events to help increase market penetration in our target markets. Our Open Gym sessions in Atlanta, Boston, Chicago, Philadelphia and Miami over the past few years have been great successes and we plan on holding one this year in New York. Children, ages 10-18, come together for a day of basketball

on Converse, both financially and physically. More than 500 pairs of basketball sneakers are distributed to the players at each event. Additionally, after experiencing the great success of our Piedmont Park basketball court opening in Atlanta, we will be opening two (2) new playgrounds in Miami and Harlem, NY by May of 2012. These public events will help us achieve the 10% U.S. market penetration that we are shooting for by 2015 (an increase by nearly five percent). In addition to these basketball related public relations events, we have been planning for even greater investments in the skateboarding community around the world. Following our own footsteps from last year, we will cohost another Texas Style Death Match in Austin Texas in April of 2012 along with Thrasher Magazine as well as another Asia Crown in May (Location still unknown) where we will give away more than $5000 in prizes. These events and the publicity from the new skatepark that we opened this past April in Huntington Beach, CA will raise awareness of the Converse skateboarding line of sneakers and will help us achieve 25 percent market penetration in the U.S. by 2015 (growth of nearly seven percent). We also have plans to open another skatepark in Austin, Texas by 2013. A large portion of last years marketing budget was allocated to the opening of Rubber Tracks, a music studio in Brooklyn, NY. Our CMO, Geoff Cottrill, has a long history using music and other arts to reach consumers, however he ensures the public that Converse is not in the music publishing business. Rubber Tracks and promotions associated with it will be used to try and give back to the community of artists that has stood by our side for many years. All recordings are free and the artist owns the rights to the music. In order to increase awareness of our efforts, we will hold promotional music contests all over the world. Between August and November of this year, we will be holding an Original Band U.S.A contest sponsored by Rubber Tracks in venues near our three (3) Converse retail locations and three (3) Salvation Multi-brand stores. These promotional activities will also help increase foot traffic in these new stores. In a related effort, we will be co-hosting an Original Band contest with one of the major third party retailers in India, Planet Sports, in January/February to help grow our global brand awareness and seek new musical talent. There are plans to host another one in Europe towards the beginning of 2012, depending on how well this India event was received. While the winner of each event will receive an offer from Rubber Tracks to record an album (up to 40 minutes of digitally mastered recordings), all performers will receive several 50% off coupons for our online store; they will have the opportunity to try on their favorite pair of Converse branded footwear while at the event and then order it online at a later date. Additionally, all attendees will receive a 20% off coupon towards Converse footwear at the local store used during in the promotion (third party, Converse or Salvation). We believe this will play a fundamental role in increasing awareness of our stores over the next year and will help us gain 50% more foot traffic. Based on extensive market research, we believe that a 50% conversion rate for our Converse retail stores and a 25% conversion rate for our multibrand Salvation stores are very realistic. The other major public relations investment at Converse is our (PRODUCT) RED Collection (made from African mudcloth), which donates 5%-15% of the net wholesale price of these shoes to the The Global Fund to help fight AIDS, Tuberculosis and Malaria. We have been a part of this RED team since 2006 and are very happy to still be promoting it today. Pricing Strategy:

Converses pricing strategy is cost based. Price points are determined based on the cost of production, distribution, and markup. The markup defines the profit that each pair of shoes generates for Converse. Converse footwear prices currently range from $25 - $200 per pair, which provided an average profit margin of 45.6% for 2011. We anticipate the same profit margin for 2012 ($728 million in sales and $331 million in revenue) while maintaining the current price range. Anticipating some global economic issues, we are working hard to provide our consumers with an affordable product. Appendix B contains a Sales Forecast for all Converse Footwear products and Appendix C contains the Break-Even Analysis for each of the eight (8) primary collections both in the U.S. market and globally. Each product generates individual profits and is monitored closely. Our PRODUCT (RED) footwear line is unique in that we donate 515% of the net wholesale price for each pair sold to The Global Fund. This fund provides services in support of fighting AIDS, Tuberculosis and Malaria. Converse is priced competitively as compared to Vans ($45-$65), K-Swiss ($55-$135) and Adidas ($40-$190). Appendix G details the price points for the Converse footwear product lines. Distribution Strategy: Distribution to all five current channels will continue as they did in fiscal year 2011. Direct domestic distribution will be used for products in the Converse retail stores, factory stores, Salvation multi-brand stores, and the website. Distribution through third party retailers will follow the existing channels; manufacturer, wholesaler, retailer and then to the consumer. Converse will use a limited number of outlets in a geographic area to sell the product. Converse will maintain their partnerships with existing retailers with focus on major retailers J.C. Penney, Footlocker, Kohls, Sears, Macys, and Dicks Sporting Goods. Converse will focus their international distribution strategy for fiscal year 2012 on emerging markets; China, Brazil, India, and Russia. Converse is projected to have a 10% global distribution increase by year end 2012. Currently Converse does not operate an international website, but after recreating the U.S. site for the first few months of this fiscal year, the web design team will begin to move out on an international site for the above listed countries. It will first launch in China in March 2012. With Converse able to sell the product directly to the consumer and eliminate the use of wholesalers and retailers, the price savings can be passed on to the consumer and all products will remain price competitive in this highly competitive market. The move to direct distribution in China will also help address the issue of counterfeiting. Converse will continue to stay strong and take action against counterfeit products. Additionally, NIKE has recently opened a 120,000 square meter China Logistics Center (CLC), which is going to help Converse and other Subsidiaries distribute products more easily within China and other Asian markets. The international launch will next come to Brazil in the beginning of fiscal year 2013. Currently Converse has only one distributor in Brazil, Coopershoes, which operates retail locations and a website. The company is in the early stages of broadening distribution in Brazil and feels that with the upcoming 2014 World Cup and 2016 Olympics, Brazil harnesses a tremendous opportunity for growth. Early planning stages will focus distribution strategies around direct to consumer distribution. This will take place by launching Converses website and opening a multi-brand retail location close to one of the major sports stadiums in Rio de Jeneiro. This retail location will sell Converse, Nike and Umbro products. Considerable research has been completed to determine that the Direct-to-Consumer strategy works well in the global market. Converse has been working closely with NIKE partners in India to grow from using one distributor

(Winter Sports) and one major retailer (Planet Sports) to establish multiple partnerships that will encourage competition. This same strategy is being used in Russia, in hopes to try and expand from only using Amersport, a Russian-owned wholesaler. Distribution of last seasons shoe line will be shipped to factory stores in the second week of each fiscal quarter. 60% of last seasons inventory will be shipped to factory stores with the remaining 40% to be sold via the website. Implementation Plan: With 80 percent of Converses revenue stream generated by footwear sales, it is imperative that we implement this Fiscal Year 2012 Footwear Marketing Plan successfully. The domestic and international marketing teams at Converse all report into CMO, Geoff Cottrill, who with the help of other top executives at Converse and Nike, is keeping our company on track to double revenue by 2015, exceeding $2 billion. Our existing marketing team consists of Mr. Cottrill, two Senior Vice Presidents (one for Retail Sales and one for promotional activities), two (2) Vice Presidents (one for the US market and one for the global team), two (2) business development managers, two (2) marketing managers, four (4) market analysts, three (3) social media specialists (one for YouTube, one for Facebook, Twitter and the Converse Blog, and one for our website), a marketing coordinator for each of the major promotions identified in the plan, and 30 assistants (all of whom have experience in promotional activities). New this year, we will be hiring a Customer Experience Vice President, who will report directly into our CMO. The main concerns for this new position are ensuring that the marketing team understands the Converse Mission and is successful in reaching out to our customers both through retail and through digital media. This person will work closely with many managers, including those in charge of the new web design, other digital media, street promotions and retail sales staff. This will help Converse express a consistent message. A schedule, detailing the high-level tasks ahead of us for the next year is attached as Appendix D of this plan. It provides a timeline highlighting the major milestones expressed in the Promotion section of this plan. The events we have outlined are critical to the success of this plan, so we have some slack built into the schedule to ensure that we have time to recover from unforeseen issues without impacting our scheduled events for the year. Based on past performance, we are confident that our team can accomplish these tasks on schedule without issue. Managing our external support teams, including the web design team and venue management companies, will be critical to this effort. In addition to tracking progress leading up to each major milestone event; managers, market analysts, and digital media experts will track appropriate market data after each event to help determine the return on investment (See Appendix F). Additionally, the continuous strategies that link to the digital media objectives and foot traffic objectives will be regularly monitored to help maintain steady growth. Appendix E identifies each objective, its end date, the progress measurement approach and the duration of the incremental measurement cycle. The incremental measurement cycle enables Converse to react to situations that were not predicted. Slower than anticipated growth in any category will result in a reassessment of the objectives and critical analysis to determine where the weaknesses are. Issues will be categorized as either internal or external and every situation will be analyzed thoroughly prior to taking action. An example of a possible uncontrollable external situation is if costs rise for raw materials, transportation or a dramatic labor rate change. By monitoring the Cost of Goods Sold on a weekly basis, the company has an opportunity to make a sound decision based on current information.

Appendix A - Marketing Budget Plan

The following data is based on a marketing budget of 10% of sales for the previous Fiscal Year Marketing Tool 2011 - % of budget Total Spend ($) 2012 - % of budget Total Spend ($) Social Media 70% $55,048,000 90.0% $79,200,000 TV 2% $1,572,800 0.0% $0 Billboard 1% $786,400 0.0% $0 Magazines 1% $786,400 0.5% $440,000 Other (e.g. subway signs) 3% $2,359,200 3.0% $2,640,000 TOTAL - Advertising (Includes Direct Marketing) 77% $60,552,800 93.5% $82,280,000 Sales Promotion 7% $5,504,800 2.5% $2,200,000 Public Relations 15% $11,796,000 2.0% $1,760,000 Personal Selling 1% $786,400 2.0% $1,760,000 TOTAL Budget 100% $78,640,000 100% $88,000,000

Appendix B Sales Forecast (Footwear) for Fiscal Year 2012

U.S Sales Forecast Total # of people in target markets Annual # of purchases per person Total Potential Market Total Potential Market % of Total Market Coverage Total Available Market Total Available Market Expected Market Share Sales Forecast (in units) Sales Forecast (in units) Price (average $80) Sales Forecast 269,629,630 1.25 337,037,037 337,037,037 90% 303,333,333 303,333,333 3.0% 9,100,000 9,100,000 80 728,000,000.00

Global Sales Forecast Total # of people in target markets Annual # of purchases per person Total Potential Market Total Potential Market % of Total Market Coverage Total Available Market Total Available Market Expected Market Share Sales Forecast (in units) Sales Forecast (in units) Price (average $80) Sales Forecast 3,616,762,302 0.75 2,712,571,727 2,712,571,727 30% 813,771,518 813,771,518 1.8% 14,647,887 14,647,887 71 $ 1,040,000,000.00

Appendix C - Break-Even Analysis (Footwear) for Fiscal Year 2012

Break-Even Analysis U.S.
Sales Percentage 17% 14% 8% 25% 20% 4% 5% 7% 100% Units Sold (Units) 1,904,000 1,568,000 896,000 2,800,000 2,240,000 448,000 560,000 784,000 11,200,000 Sales Revenue ($) $123,760,000 $101,920,000 $58,240,000 $182,000,000 $145,600,000 $29,120,000 $36,400,000 $50,960,000 $728,000,000 Average Selling Price ($) $67.50 $72.50 $70.00 $60.00 $52.50 $147.50 $57.50 $50.00 Not Applicable Fixed Costs By Line $21,734,500.00 $17,899,000.00 $10,228,000.00 $31,962,500.00 $25,570,000.00 $5,114,000.00 $6,392,500.00 $8,949,500.00 $127,850,000 Variable Costs By Line $45,630,210.00 $37,577,820.00 $21,473,040.00 $67,103,250.00 $53,682,600.00 $10,736,520.00 $13,420,650.00 $18,788,910.00 $268,413,000

Product Line Chuck Taylor All Star Jack Purcell One Star Basketball Skateboarding Converse by John Varvatos Converse (PRODUCT) RED Sports Authentics TOTAL

BEP (Units) 499,247 368,789 222,181 886,996 896,107 41,397 190,624 343,755 3,449,096 $ $ $ $

BEP ($) 33,699,179.84 26,737,188.34 15,552,665.21 53,219,751.88

$ 47,045,593.22 $ 6,106,105.36 $ 10,960,895.88 $ 17,187,734.71 $ 210,509,114.44

Break-Even Analysis Global

Sales Percentage 22% 19% 10% 15% 15% 12% 2% 5% 100% Units Sold (Units) 2,860,000 2,470,000 1,300,000 1,950,000 1,950,000 1,560,000 260,000 650,000 13,000,000 Sales Revenue ($) $228,800,000 $197,600,000 $104,000,000 $156,000,000 $156,000,000 $124,800,000 $20,800,000 $52,000,000 $1,040,000,000 Average Selling Price ($) $67.50 $72.50 $70.00 $60.00 $52.50 $147.50 $57.50 $50.00 Not Applicable Fixed Costs By Line $68,310,000.00 $58,995,000.00 $31,050,000.00 $46,575,000.00 $46,575,000.00 $37,260,000.00 $6,210,000.00 $15,525,000.00 $310,500,000 Variable Costs By Line $56,075,800.00 $48,429,100.00 $25,489,000.00 $38,233,500.00 $38,233,500.00 $30,586,800.00 $5,097,800.00 $12,744,500.00 $254,890,000 BEP (Units) 1,426,302 1,115,363 616,156 1,153,044 1,415,951 291,337 163,882 510,807 6,692,844 $ $ $ $ $ $ $ $

Product Line Chuck Taylor All Star Jack Purcell One Star Basketball Skateboarding Converse by John Varvatos Converse (PRODUCT) RED Sports Authentics TOTAL

BEP ($) 96,275,397.12 80,863,843.60 43,130,924.58 69,182,647.45 74,337,451.18 42,972,224.39 9,423,225.27 25,540,355.85

$ 441,726,069.44

Appendix D Converse Marketing Plan Schedule of Major Milestones

Appendix E Marketing Objectives and Measurement

Category Goal Year Objective Grow total market share from 1.5% to 1.8% by end of 2012 Measurement Approach Gather global market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2012 Gather global market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2015 Gather U.S. market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2012 Gather U.S. market data for the sports and sports inspired footwear industries and compare to Converse revenue at Fiscal yearend 2015 Compare yearend 2011 revenues to yearend 2015 revenues for each category of footwear Gather U.S. market data for skateboarding footwear for yearend 2012 and compare with Converse skateboarding revenues Gather U.S. market data for skateboarding footwear for yearend 2015 and compare with Converse skateboarding revenues Gather U.S. market data for basketball footwear for yearend 2012 and compare with Converse basketball revenues Gather U.S. market data for basketball footwear for yearend 2015 and compare with Converse basketball revenues Incremental Measurement Cycle

Market Share

2012

Quarterly

Market Share

2015

Grow total market share from 1.5% to 2.5% by end of 2015

Yearly

Market Share

2012

Grow U.S. market share from 3% to 3.5% by end of 2012

Quarterly

Market Share

2015

Grow U.S. market share from 3% to 5% by end of 2015

Yearly

Segments

2015

Increase global sales within each segment by 100% for 2015 Grow Skateboarding footwear U.S. market share from 18.5% to 19.5% by 2012 Grow Skateboarding footwear U.S. market share from 18.5% to 25% by 2015 Grow basketball footwear U.S. market share from 5% to 7% by 2012 Grow basketball footwear U.S. market share from 5% to 10% by 2015

Quarterly

Segments

2012

Monthly

Segments

2015

Yearly

Segments

2012

Monthly

Segments

2015

Yearly

Category

Goal Year

Objective Grow "Artist" U.S. market share from 5% to 6% by 2012 Grow "Artist" U.S. market share from 5% to 8% by 2015 Grow "Teenager" U.S. market share from 2% to 3% by 2012 Grow "Teenager" U.S. market share from 2% to 5% by 2015 Increase Converse Retail Store sales by 50% for 2012 Increase Factory Store sales by 15% for 2012 Increase Website sales by 20% for 2012 Increase Third Party Retailer sales globally by 3% for 2012 Increase Salvation Multi-brand Retail store sales by 50% for 2012 Obtain customer satisfaction of at least 95% Retain 85% of the customers in 2012 as repeat customers in 2013 Increase Twitter followers by 15% for yearend 2012 Increase Converse and Converse All Star fan base on Facebook each by 10% for 2012

Measurement Approach Gather U.S. market data for artists footwear for yearend 2012 and compare with Converse revenues generated by artists Gather U.S. market data for artists footwear for yearend 2015 and compare with Converse revenues generated by artists Gather U.S. market data for Teenagers footwear for yearend 2012 and compare with Converse revenues generated by teenagers Gather U.S. market data for Teenagers footwear for yearend 2015 and compare with Converse revenues generated by teenagers Monitor sales figures for each of 3 stores Monitor sales figures for each of 51 Factory Stores Monitor sales figures for Website Monitor sales figures (via UPC scanning) for all third party stores Monitor sales figures for each of 3 stores

Incremental Measurement Cycle Monthly

Segments

2012

Segments

2015

Yearly

Segments

2012

Monthly

Segments Channels

2015

Yearly

2012 Channels Channels Channels 2012 Channels 2012 Satisfaction 2012 Satisfaction 2013 Social Networking Social Networking 2012 2012

Daily Daily Daily Daily

Daily

Send out survey cards in every box of sneakers and send e-mail to people who provide e-mail information upon purchase Track online and store traffic through Credit card transactions

Bi-Weekly

Yearly

Track "Follower" growth Daily Track Facebook Fans Daily

2012

2012

Category Social Networking Promotional

Goal Year 2012

Objective Introduce ten (10) new videos on YouTube per quarter Host annual skateboarding and basketball events to drive brand awareness Use Rubber Tracks recording studio to increase awareness of Converse and Salvation Multi brand stores Increase Converse retail stores and Salvation multi-brand stores store traffic by 50% by 2012 Achieve a conversion rate of 50% for all retail stores Achieve a conversion rate of 25% for salvation multi-brand stores Achieve 80% conversion rate for online sales for products placed in the shopping cart Achieve a 5% conversion rate for every customer that navigates through the Shop menu on the Converse website Continue current distribution figures in all existing channels By year end 2012, convert to direct distribution in China

Measurement Approach Advertisement development team will know how they are doing The success of these events will be measured individually using local market data. It will be necessary to ask customers "what event initiated their purchase today" Ask customers in retail locations how they heard about the store

Incremental Measurement Cycle Weekly

2012

Monthly

Traffic Building 2012

Monthly

Traffic Building 2012

Count the number of customers who walk into each of the retail stores

Monthly

Traffic Building 2012 Traffic Building 2012

Traffic Building 2012

Divide number of transactions by total foot traffic count for all retail stores Divide number of Converse transactions by total foot traffic count divided by Converse footwear's percentage of Nike sales for all 3 retail stores Use HTML scripting to count how many people actually make a purchase after putting something in their shopping cart Use HTML scripting to count how many people actually make a purchase after choosing to search the "store" part of the website

Daily

Daily

Daily

Traffic Building 2012

Daily

Channel/Distrib ution Channel/Distrib ution

2012

Compare distribution paperwork with last year for each individual channel Monitor relation with China after Chinese Website is rolled out

Monthly

2012

Daily

Category Channel / Distribution

Goal Year

Objective 10% increase in distribution to emerging markets; Central and Eastern Europe, China, and Brazil Sell 100% of last seasons footwear inventory at factory locations and online Continue distribution of 60% of last seasons shoes to factory stores on a quarterly basis; remaining 40% will be sold online Maintain current price points for each footwear product line and have a contingency plan to reflect increase in cost of goods, raw materials (rubber and cotton), labor, and transportation

Measurement Approach Monitor emerging market distribution channels

Incremental Measurement Cycle

2012

Weekly

Channel / Distribution 2012

Channel / Distribution 2012

Keep accurate inventory throughout the year at the manufacturing plants and compare to total units sold at the end of the year Keep accurate inventory throughout each quarter at the manufacturing plants and at the end, distribute 60% shoes unsold to factory stores Review sales figures and production costs with Operations VP and determine if costs are rising, falling, or staying the same. If costs are rising, re-evaluate price points and determine if a price adjustment is necessary for next quarter.

Monthly

Quarterly

Pricing / Inventory

2012

Weekly

Appendix F Action Success Measurement

Marketing Action New Website Mass Transportation Advertising Success Criteria 20% Increase in revenue Generates more revenue over the course of Fiscal year 2012 than the campaign cost at the beginning Measurement Approach Compare revenues from 2011 to 2012 Targeted market research in local area to determine if their ads are noticeable and if they have encouraged people to purchase Converse footwear Targeted market research in local area to determine if their ads are noticeable and if they have encouraged people to purchase Converse footwear Targeted market research in local area to determine if their ads are noticeable and if they have encouraged people to purchase Converse footwear Ask customers if they've heard of Open Gym, if they've played there, if they knew it was run by Converse Track digital media hits and track online store traffic for those who view the footage streamed daily Incremental Measurement Cycle Daily

Yearly (end)

Sports Arena Advertising

Generates more revenue over the course of Fiscal year 2012 than the campaign cost at the beginning

Yearly (end)

Magazine Advertising

Generates more revenue over the course of Fiscal year 2012 than the campaign cost at the beginning

Yearly (end)

Open Gym - NY

Establishes "neighbor" relationship with local basketball community; Generates sales for 2012 that are at least equal to the cost of the event

Daily (Post-Event)

Marketing Action Harlem Basketball Court Dedication

Success Criteria Establishes "neighbor" relationship with local basketball community; Generates sales for 2012 of at least 50% of dedication cost

Measurement Approach Ask customers if they've heard of the park, if they've played there, if they knew it was run by Converse Track digital media hits and track online store traffic for those who view the footage streamed daily

Incremental Measurement Cycle

Daily (Post-Event)

Miami Basketball Court Dedication

Establishes "neighbor" relationship with local basketball community; Generates sales for 2012 of at least 50% of dedication cost

Ask customers if they've heard of the park, if they've played there, if they knew it was run by Converse Track digital media hits and track online store traffic for those who view the footage streamed daily Daily (Post-Event)

Texas Style Death Match

Establishes "neighbor" relationship with local skateboarding community Generates sales for 2012 that are at least equal to the cost of the event

Track digital media hits and track online store traffic for those who view the footage

Daily (Post-Event)

Asia Crown

Increase awareness of Converse in Asia; Monitor online and third party sales in local area to see an increase

Track digital media hits and track online store traffic for those who view the footage

Daily (Post-Event)

Marketing Action Austin Skatepark Dedication

Success Criteria Establishes "neighbor" relationship with local skateboarding community; Generates sales for 2012 of at least 25% of dedication cost

Measurement Approach Ask customers if they've heard of the park, if they've skated there, if they knew it was run by Converse Monitor kids who skate there (cameras are installed) and monitor what they wear Track digital media hits and track online store traffic for those who view the footage, which is updated daily

Incremental Measurement Cycle

Daily (Post-Event)

Original Band U.S.A

Provide individual an opportunity of a lifetime; Increase awareness of Converse and Salvation Stores Provide individual an opportunity of a lifetime; Increase awareness of Coverse footwear brands

Track digital media hits and track online store traffic for those who view the footage Track digital media hits and track online store traffic for those who view the footage

Daily (During event) Weekly (After Event)

Original Band (India)

Daily (During event) Weekly (After Event)

Appendix G Converse Footwear Pricing

Shoe Product Line Selling Price Last Seasons Inventory Chuck Taylor All Star $25.00 - $110.00 $9.99 - $24.99 Jack Purcell $35.00 - $110.00 $19.99 - $39.99 One Star $60.00 - $80.00 $24.99 - $49.99 Basketball $50.00 - $70.00 $24.99 - $49.99 Skateboarding $30.00 - $75.00 $24.99 - $49.99 Converse by John Varvatos $95.00 - $200.00 $24.99 - $76.99 Converse (PRODUCT) RED $45.00 - $70.00 $39.99 Sports Authentics $30.00 - $69.99 $19.99 - $61.99 *NOTE: Includes shoes for all ages, both male and females, we well as specialty shoes (e.g. Design your Own, Dr. Seuss, and Converse Americana).

Appendix H Converse Footwear Revenue Distribution by Segment

Converse Footwear U.S. Revenue Distribution by Segment

Teenagers 35%

Artists 15% Basketball Players 25% Skateboarders 20%

Other 5%

Converse Footwear Global Revenue Distribution by Segment

Teenagers 25%

Artists 20%

Other 25%

Basketball Players 15%

Skateboarders 15%