Hi again, Loris. This design has two applique sections (the beard and the coat/hat). You can do the applique in one of two ways, one is the first way you mentioned, which I've heard called the "blob" method:
https://www.embroidery.com/help.ec?docid=1629&div=Step
Or, you can pre-make your applique templates. Here's one way to do that, from our project gallery:
https://www.embroidery.com/help.ec?docid=1631&div=Step
https://www.embroidery.com/help.ec?docid=1637&div=Step
I hope this helps!
~Heather
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Loris J.
Hi when you say applique do you mean embroidery and cutting around it to make as such
or is it with cut and paste materials