To make your own fabric cut-out for the appliqué you can trace the fabric by first making a template of your placement stitch. Either print out the placement stitch or stitch out the placement stitch and cut around the outline. You can also start the design on paper and let your needle cut out the template. I suggest getting some HeatnBond Lite. After you cut out your pattern trace your pattern on the HeatnBond. You can iron on fabric of your choice and cut out. The material is much easier to cut out after the HeatnBond is applied. The purpose of the HeatnBond keeps the appliqué from having any puckers after washing. After applying the HeatnBond spray the wrong side with some spray adhesive (Sulky or Maderia ) and this will hold it in place while you are sewing your tack stitch.
If you do not want to precut your appliqué you can also sew the fabric after the placement stitch is done. Cut out a square slightly larger than the design from your favorite fabric. After you sew the first tack stitch remove the hoop from your machine. Take caution in moving the hoop so you do not shift your hooped item. After removing the hoop trim carefully around the stitches. I suggest using appliqué scissors as you will be able to trim closer to the stitches. Place your hoop back under your machine and complete the sewing sequence.
Once the fabric of your choice is cut you can follow the above instruction again. You will now have your paper template for future use. Just restart the design from the beginning and you are ready to sew out your design.
*Kits with the fabric included can be purchased at http://www.kinshipk.com