Continuation of My Discussion on Over-Reaching MAP Price Policies

Many scuba manufacturers seem set on the concept of “creating a level playing field” for all dealers…local scuba stores and internet retailers alike. I have honestly never understood what this means, given that I can’t think of any other area of life where the playing field is level.

Scuba industry MAP price policies are really an attempt to buffer the difference between the traditional scuba store and the newer business models used by internet retailers. The major scuba companies seem to be trying to achieve a situation where the same price exists for a given product, regardless of the geographic location of the market, regardless of the economic strength of the market area, and regardless of the business model of the retailer offering the product. Most, fearing direct movement toward minimum retail price policies, attempt to do this through writing VERY restrictive MAP price policies that actually achieve the same thing. I would argue that “the same price” is confusing to consumers, who expect to see the natural variation in prices, and absent that variation, expect that something is rigged. I would argue that creating “the same price” for all retailers would be anything but level. In fact, this is a pricing concept that guarantees that the playing field is NOT level. In the internet scuba retail business (and this is EXACTLY what this is all about), the concept of “the same price” heavily favors the larger, established internet retailers. They already have the most traffic, they already have the highest customer count, they already have the marketing advantage. For a smaller internet retailer, this level playing field completely eliminates the ability to grow market share, by using the important motivator of price to obtain new customers. Many smaller internet retailers need to go head to head with the larger retailers, on price, in order to gain some market share.

The major scuba companies have an unusual group of supporters in the establishment of these very restrictive MAP policies….the largest scuba internet retailers. I personally KNOW that some of the large retailers want complete price parity; they want “the same price”. It protects their margins, but mostly, it prevents any “upstarts” from encroaching on their market, through lower prices driven by leaner operations and a willingness to surrender profit margin for website traffic and business growth. In other words, it prevents new internet retailers from gaining market share EXACTLY the same way the big guys did it in the beginning….with price competition. Over-reaching MAP price policies that insist upon “the same price”, and complete elimination of all discounts, simply give a never-ending, manufacturer-protected franchise to the biggest of the big scuba internet retailers.

I realize that many manufacturers, from a variety of industries, have MAP price policies. Scuba manufacturers certainly have the right to do the same. However, when the policies are written with rules and restrictions that are so over-reaching that they extend beyond price advertising, and attempt to attain “the same price” everywhere, then that is going too far. In our industry, already saddled with many systemic problems with few solutions, we don’t benefit when structures are put in place that prevent dealer to dealer competition in all areas, including price.

Phil Ellis

Discount Scuba Gear and Equipment at DiveSports.com

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

I am amazed that we continue to hear dishonest and misleading statements designed to scare scuba divers away from purchasing scuba gear from Internet resellers.  This morning, I was reading one of my favorite scuba chat boards and ran across a link listed in one of the user’s signature lines.  Being curious, I followed the link and found the following quote from one of the pages on the target site.

SHOULD I BUY GEAR OVER THE INTERNET TO SAVE A LITTLE MONEY?

No… Many Internet gear retailers purchase the left over inventory of dive shops that have financially failed. In some cases the equipment has been on the shelf deteriorating for years. Most equipment designs don’t change for 5-7 years. Internet gear retailers are not recognized by diving equipment manufacturers. Gear purchased over the Internet is not covered by the manufacturers lifetime warranty. Many dive shops will not repair equipment purchased on the Internet. No dive shop will do warranty work on equipment purchased on the Internet. The equipment you use while diving provides life support. Why risk injury to save a few dollars.

Quote Taken From http://www.midwestscubadiving.com/Gear.aspx

I continue to be amazed at what some scuba stores, organizations, and individuals will claim as fact, without any evidence that it is true.  First, almost all of the scuba Internet retail sites, including DiveSports.com, are fully authorized dealers for the brands we resale.  Far from being discouraged by our brand manufacturers, most of us are considered very loyal and important customers.

While “getting left over inventory from stores that have financially failed” might have been used on occasion by a few Internet resellers, this would be a very poor merchandise procurement plan.  Customers come to the Internet to get the best and the latest gear available, stuff that is often not available at a small, local scuba store.  Furthermore, while there are a lot of scuba store failures, that particular method of merchandise procurement would NEVER supply the needs of an active and robust Internet reseller.

The quote states that “no dive shop will do warranty work on equipment purchased on the Internet”.  I think this is a pretty broad and greatly inaccurate statement.  If equipment is purchased from an auhtorized dealer, no matter where that is, I would think another dealer should very willingly do service work.  If equipment is purchased on the Internet from an Authorized Dealer, what grounds would another dealer have for refusing service?  Since they get considerable revenue from they service, why would they refuse in the first place?

This quote is simply wrong and makes no sense.  The largest majority of internet resellers are fully factory authorized dealers and we trade on the Internet mostly under the same name as our brick and mortar stores.  There is no subterfuge going on here.  We aren’t pulling one over on our suppliers.  We are honest retailers who use multiple ways to distribute our merchandise.

If you are going to try to scare your customers into buying from you or someone in your cartel, at least use the truth.  Lies and misstatements like those found in this quote only harm the writer and the industry.

Phil Ellis

Fully Factory Authorized Discount Scuba Gear

Yesterday, I made a post on this blog about the exciting efforts of Team Scuba for the upcoming NASCAR Bush East season.  In that post, I credited DEMA as being a supporter of this effort.  Several communications from people involved with Team Scuba have voiced the opposite.  Not only does DEMA not financially support the Team Scuba NASCAR effort, they are apparently hostile to the effort.

Ray Black Sr. is the owner of Commercial Diving Academy in Jacksonville, Florida.  He is also team owner of Team Scuba.  Jed Livingstone is Vice President of NAUI, one of the major sponsors of Team Scuba.  From reports I have been able to get today, and from comments from these involved individuals, it appears that DEMA was offered an opportunity to participate in this effort.  They refused.  In fact,  they demonstrated some level of hostility by CHARGING Team Scuba for the right to exhibit the race car at the recent DEMA show in Orlando, Florida.  I am simply forced to ask myself why. 

The scuba diving industry grew up in California.  Most of the major scuba manufacturing companies are located in California.  The largest scuba certification agency in the world, PADI, is headquartered in California.  Some Californians view NASCAR as simply a “southern” thing.  They fail to realize that this sport is the fastest growing spectator sport in the United States.  They don’t see that NASCAR fans are among the most brand loyal fans of any sport, that the typical NASCAR fan has a family income considerably larger than the average income in the United States, and that NASCAR fans recognize the drivers as being real athletes.  A quote from the James Madison University Center for Sports Sponsorship says it perfectly.

Maybe a simple lack of knowledge about the marketing power of NASCAR is the reason that DEMA would not offer support to Team Scuba.  Maybe DEMA is spending all of their available funds on the Be a Diver campaign.  Regardless of the reason, we hope it will change. 

I have no doubt that a successful season for Team Scuba will likely do nothing to impact the number of new scuba diver certifications in California; but there is scuba diving far east of California.  Those of us in the south eastern part of the United States would LOVE to have the NASCAR crowd in our scuba stores.  We know they love their sport, they believe their sponsors, and they support the brands and organizations that sponsor NASCAR.  Even a moderately successful season for Team Scuba will make a gigantic difference to scuba diving east of California.

I would like to suggest that DEMA change their attitude toward the NASCAR effort being advanced by Team Scuba.  This is a team with a good plan, a great young diver, and they are participating in a rapidly growing part of automobile racing, the NASCAR Bush East series.  Maybe DEMA could begin to shift their support by returning any money Team Scuba paid to DEMA for the rights to display at the show.   Let Team Scuba spend it putting this fast kid and his fast car in front of a brand new group of potential divers.   After all, what THEY are doing will actually improve the economic picture for the DEMA members.

I am sorry for mistakenly giving DEMA credit when credit was not deserved.  I hope that DEMA, and all of the other large potential industry sponsors, will realize that what we need in the scuba diving industry is more scuba divers…..even if they also happen to love NASCAR racing.

Phil Ellis

Note to Ray:  Bring your demonstration car to my store in Alabama and I will show you a crowd of people that love scuba diving and NASCAR.

You Can Race to Discount Scuba Gear at Dive Sports

As I have mentioned in previous posts on this blog, it appears that the money interests in this sport of scuba diving have finally determined that we need to do something different to stimulate interest in scuba diving.  Yesterday, I blogged about the DEMA Be a Diver campaign and my hopes that this will be a successful effort.  Today, I want to talk about another effort supported by DEMA to achieve this same objective.

Diver Down Motor Sports, with the support of DEMA and a number of principal manufacturers and other industry stakeholders, will field a scuba diving themed race car in the increasingly popular NASCAR Bush East Grand National series.  Led by young driver Ray Black, Jr., Team Scuba will bring scuba diving to the millions of fans of NASCAR racing.  NASCAR has demonstrated the ability to provide clean, effective sponsorship opportunities to some of the largest corporations and most prominent organizations in the country.  The brand loyalty and product recognition among NASCAR fans is among the highest for any advertising or promotional opportunity, and the number of potential consumers reached by a winning NASCAR team is simply mind-boggling.

While the connection between scuba diving and NASCAR racing may seem a little strange at first glance, this race car sponsorship idea may well make some sense.  Ray Black Jr. came onto the stock car racing scene with an amazing performance right out of the gate.  Even at his young age, he has apparently demonstrated all of the qualities necessary for a successful race car driving career.  The follow except was taken from the Team Scuba website:

 With talent and determination, 16-year-old Ray Black Jr. took the FMCRA Junior All Star series by storm. At the age of 15 he not only finished in the top five in every race, bit collected seven wins. The team secured the Championship for the FMCRA Junior All Stars, making him, FMCRA’s “Rookie of the Year for 2006.” Ray Black Jr. and Diver Down Motorsports’ “Team Scuba’ have built a reputation of solid and honest racing style.

If Team Scuba and Ray are able to lead only one or two races in the Bush East series next year, the television exposure on cable channels that exactly target the diving demographic will be invaluable.  Scuba diving should realize the same benefits seen by the largest corporations in the country through NASCAR sponsorship.

This industry sponsorship of a NASCAR team is exactly the out-of-the-box thinking that is essential to the growth of this industry and this sport.   I know I will be personally taking a little more interest in Bush racing next year and everyone involved in the industry, either consumer or supplier, should wish Ray Black, Jr and Team Scuba good luck.

Phil Ellis

Your Local Scuba Store…No Matter Where You Live!

It is common knowledge that new scuba diver certifications are at a stalemate and that the industry is barely able to maintain the number of “active” divers from one year to the next.  While this heavily impact everyone in the scuba diving industry, none feel it as brutally as the local scuba retail store.  For several years, local scuba stores have been wondering when someone was going to do something about this very low certification rate.  It seems as if no one takes responsibility for the overall health of the industry.

Several days ago, I made a post about the Be a Diver campaign that will be launched by the Dive Equipment Marketers Association (DEMA) early in 2008.  The campaign includes cross-sport advertising in magazines and periodicals, Internet promotion on the www.beadiver.com website, and television commercials in select major markets.  This campaign offers some great potential to let non-divers know just how easy and fun it is to become a scuba diver.

Today, DEMA announced that the Divers Alert Network and most of the major scuba diving certification agencies have signed on to this program and will provide support in dollars, promotional efforts, andhuman resources to make sure that this program is a success.

San Diego, Calif. – (December 3, 2007) – The Diving Equipment and Marketing Association (DEMA) today announces the endorsement of their soon-to-be-launched Diver Acquisition Campaign – Be A Diver – by some of the Industry’s training organizations: Divers Alert Network (DAN), Professional Association of Diving Instructors (PADI), Scuba Diving International (SDI/TDI) and Scuba Schools International (SSI). The endorsement comes following the announcement of the Be A Diver campaign and the preview of the national television and print advertising last month at DEMA Show 2007 in Orlando, Florida.

Quote taken from DiveNewsWire Press Release

I certainly hope this campaign by DEMA is successful.  The entire industry needs to pull in the same direction, for a change, and realize that the ONLY way to grow this industry and grow this sport is to make sure that the widest possible audience is aware of the benefits of this sport.  Maybe 2008 will be the year that finally gets the good message out about scuba diving.  I hope we see a surge in new diver certifications next year.  Good luck DEMA.

Phil Ellis

Learn to Scuba Dive at Dive Sports!

As avid scuba divers, we all need to be aware of things happening in the scuba industry.  After all, scuba industry events affect us all.  Over the past ten years, the number of new diver certifications have barely kept pace with population growth.  By some estimates, they have actually fallen when corrected for population growth.  Many organizations have made feeble attempts to promote diving nationally;  in most cases with poor results.

The Dive Equipment Marketing Association (DEMA) is the “trade association” for local dive stores, diving resorts, and manufacturers.  While they have managed various attempts to impact diver certifications over the past few years, most of them have had little result.  This may be changing.

DEMA has some new plans for 2008, all targeted at letting non-divers know about this great sport and improving the number of new entrants to scuba diving.  Their involvement with the NASCAR through sponsorship of a car in the NASCAR East series, has interesting potential.  The most interesting new DEMA program is BE A DIVER.  Be a Diver is designed to use cross-sport promotion to reach the target consumer that might have an interest in diving and bring them into a retail store for training and equipment purchases.  Ads and video will be offered in various publications, including sports related television channels.  The following quote was issued today and was taken from DiveNewsWire, an industry Internet publication designed to announce new industry products and initiatives.

BE A DIVER Campaign Moves Ahead

DEMA’S MOST AGGRESSIVE DIVER ACQUISITION CAMPAIGN ON TRACK FOR EARLY 2008 LAUNCH

DEMA’s most aggressive Diver Acquisition Campaign continues to make significant progress since its announcement at DEMA Show 2007.  The elements of the Be A Diver marketing campaign continue to be put into place, making it one of the most sophisticated programs DEMA has ever undertaken to grow the industry.

The brand new DEMA television commercial can be viewed by clicking this link: http://www.youtube.com/watch?v=UDkbzQp6hfQ

DEMA continues to work directly with lifestyle database information from Pitney Bowes to make it possible for Retail DEMA members to locate their current customers, determine where potential customers will most likely be found, and provide the option for member dive retailers to acquire the actual street addresses for potential customers they wish to target. DEMA’s “Big Wave” Dave Reidenbach will work directly with those retailers wishing to use this sophisticated marketing tool.

The BeADiver.comwebsite construction continues, creating a highly sophisticated, easy to navigate resource that will showcase DEMA members differently than other retailers listed on the website’s Retail Store Finder facilitating easy customer access to DEMA-member stores first.  DEMA member stores will receive recognition of their membership, as well as links to an on-line mapping program to make it easy for potential customers to find them.

The FREE Member Promotional Guide is being finalized and will include everything needed to execute a successful, state-of-the-art advertising campaign including access to digital versions of logos, images, posters, banners, window decals, website banners, outdoor billboards, sales flyer templates, direct mail postcards, self-mailers, and TV and radio spots. There will be two versions of professional broadcast spots to utilize for radio and television: a 30 second commercial designed for the national campaign and a shorter 23 second spot with a seven second tag for the DEMA member business’ message (23:7 cut). In fact, all of the components of the ad campaign can be customized with the member’s message by using the provided templates which have space for logos, and in some instances, sell copy.

Other tools needed by diving businesses to attract non-divers are also coming together – in addition to the television commercials and radio ads, several versions of print ads, and even on-line and hard copy mailers aimed for the targeted customer will be part of the member-only resources provided by DEMA in affiliation with the campaign.

If you are not a current DEMA member, now is the time to join!  Access to the elements of the Be A Diver campaign, including the national and regional campaign tools, highlighted website listing, Promotional Guide and customer lifestyle cluster data is all part of the value of being a DEMA member. Never has your DEMA membership had such a high return on your investment!

For more information about being a member of DEMA and about DEMA’s Be A Diver program, visit www.dema.org.
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Original Source Link:  http://www.divenewswire.com/

 As this new DEMA initiative matures, we will be having more to say about the BE A DIVER program.  For the health and growth of this industry and this sport, we all hope the 2008 efforts of DEMA will be successful.

Phil Ellis

Discount Scuba Diving Equipment

I am amazed at the number of recalls, especially in the toy sector, on products made in China.  I can’t think of a single toy company or large toy retailer that has not been crippled during this holiday season by these recalls.  Millions of toys have been removed from the shelves for consumer protection reasons.  In fact, this series of toy recalls seems so coordinated that I am left to ask……”Is this a coordinated effort to tarnish Chinese manufacturing by groups that oppose the transfer of jobs?”  “Did they just start using the suspect paint and materials this year?” A serious question for those of us in our industry is bound to be…..”Will an anti-China manufacturing bias affect the scuba diving industry?”

There is no doubt about it, China plays a gigantic role in the equipment used by scuba divers in the United States.  Some of the most popular regulators are made in Taiwan and mainland China, Chinese made buoyancy vests are becoming more and more popular, and several major, name-brand scuba companies have their primary manufacturing in China.  Is this good for scuba diving?  I think the simple answer is….YES!

Divers have been well served by Asian-made scuba diving equipment for many years.  If you take a look at the variety of accessories available to divers, like webbing pockets, knives, finger spools, dive bags, slates, and a variety of other items, we would be paying much higher prices without Chinese manufacturing.  Several of the most popular regulators used by the growing number of technical divers in the United States and Europe are made in China.  Several large, name-brand scuba companies use BC vests, harnesses, wing, and back plates made in China.  One of the most popular twin set isolation manifolds sold here in the US is made in China.  There is no doubt, China and the other emerging manufacturers in the far east play a gigantic role in our industry.  If there is an consumer backlash against Chinese and Asian scuba diving equipment looming in the future, we will be paying much higher prices for the stuff we use in our sport.  Without the economy of Asian manufacturing, much of the new product we see each year simply would not exist.

We should all ask ourselves a simple question; “Have we been well served by the Asian equipment we are currently using?”  “Are scuba divers threatened by Chinese and other Asian manufacturing?  Try, for a moment, to forget where we WISH the stuff was manufactured, because that ship has already sailed.  Forget, for a moment, how we feel politically about Asian manufacturing.  Think about what is best for us as diving consumers and what is best for our sport.  Already depressed by the high entry price into our sport, we can not expect good things if we lose the lowest cost scuba manufacturing capability in the world.

These are difficult questions for me as a scuba retailer and as an avid diver.  Chinese and other Asian-manufactured goods are simply a fact of my life.  Try, like me, to be reasonable about these considerations.

Phil Ellis

Purchase Discount Scuba Diving Equipment from DiveSports.com