The scuba industry has long been ruled by Minimum Advertised Price (MAP) policies. These programs, included by reference in almost all scuba industry dealership agreements, establish the lowest price a retailer may use when advertising a scuba product. Almost all such policies state two primary objectives; 1) to “level the playing field” so that all scuba retailers (local dive stores, primarily) are able to maintain a high profit margin, and 2) to “protect the value” of the brand being controlled. While I have VERY strong opinions of these objectives, I will not argue the ability of these policies to achieve these objectives. I will discuss what happens when a company attempts to go beyond the advertised price, beyond the posted price of the product, and moves to establish an “over-reaching” MAP policy.

In early January, a “price war”, of sorts, broke out among several of the largest scuba Internet retailers. This little “price spat” manifested itself as these merchants offered “whole order discounting” on any order placed in their site, in an attempt to spur website traffic in a slow time of the year. If the site contained scuba products already priced at the MAP price, then the whole order discounts provided by the combatants would result in the resell of the products below the manufacturer’s minimum advertising price.

This war resulted in a great deal of negotiation and discussion among several of the scuba manufacturers and these merchants that were offering whole order discounts. These negotiations, and the discussions involved, were only among the companies and the people causing the infractions; other retailers had no way to know of the discussions and were not involved in any of the “agreements” made as a result. After all agreed to play nice, the whole order discounts were “officially” ended and all was well in the scuba industry. Then, in steps DiveSports.com.

While this little retailer price spat was taking place, we were busy developing the new Divesports.com website. All along, we had planned to offer some purchase incentives as our customers moved from our old site to the new one. One such promotion was to provide a free $10 Gift Card with orders of $100 or more. Another provided other discounts that could be achieved by using the discount code capability of our new website platform. Remember, we WERE NOT INVOLVED in this first little dust-up about whole order discounts, but boy did we hear the news when we launched our new site with the purchase incentives. In fact, one of my early posts on this blog, titled Scuba Industry Price Controls dealt with a little of the blow-back we got from manufacturers and some of our competitors.

We are now several weeks past this initial confrontation about pricing. We are now starting to see manufacturers that are revising their policies to prohibit ANY DISCOUNTS on their products that would bring them below the MAP price. No “club” discounts, no “member” discounts, no “frequent customer” discounts, no “free gift cards” with purchases, no “chat board” discounts…in fact, not advertised discounts at all! While this seems to be an attempt to “level the playing field” for retailers, I personally think the new policies border on RETAIL PRICE CONTROL, a type of control that most consumers reject and that most manufacturers have worked hard to keep at arms length. The text of these new policies we are now seeing create a very complicated set of business rules, rules which are wide open for misunderstanding, and result in policies that will hurt the ability of local and on-line retailers to increase traffic, build business, and provide value to consumers.

Over-reaching MAP policies quickly morph into Retail Price Controls. This is a bad thing for our industry and it is terrible for consumers. Over-reaching MAP policies assume that all retailers WANT and NEED a level playing field. Some of us would prefer to slug it out in the marketplace with competitors. Over-reaching MAP policies interrupt the natural negotiation that occurs when a customer comes to the cash register…which is exactly what our shopping cart includes…a cash register. Over-reaching MAP policies require too much interpretation by the merchant, thereby complicating the business of doing business. Over-reaching MAP policies cause distrust among scuba consumers, who see the exact same price everywhere they go….. something that this industry simply cannot afford, and something we have worked hard to combat.

Over the next few weeks, I am going to be saying more about my personal and business feelings about MAP policies that attempt to encumber the operation of my business. Some of the things I intend to say will not go down like a smooth, sweet pill. They will, however, be the truth of my opinion on the importance of this subject for scuba diving equipment retailers and local scuba stores. Stay tuned for more information about over-reaching minimum advertised price policies in the scuba diving industry.

Phil Ellis

www.divesports.com