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Diving Equipment and Marketing Association DEMA

Annual Activity Report 2009


DEMA 2009 Annual Activity Report Table of Contents What is DEMA? 2009 Board of Directors and 2009 Membership Categories 2009 Board of Directors contact list Committees and Their Accomplishments • Committees and chairs • Manufacturer’s • Promotions • Show Committee • Legislative Research Programs

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What is DEMA? Description: Worldwide Trade Association for the Recreational Diving and Snorkeling Industries. 1,300 member companies. Mission: To Promote sustainable growth in recreational diving and snorkeling while protecting the environment. Goals: 1. To produce an annual trade event for the industry which serves the needs of its stakeholders and produces a successful financial outcome for the association. 2. To engage in marketing programs which promote the industry, create new customers, drive business into retail stores and resorts and promote diver retention. 3. To monitor potential legislation which could adversely affect the industry. 4. To engage in marketing research programs which will: a. Define the universe of divers b. Determine the rate of erosion amongst existing divers c. Determine the number of entry level certifications which take place in the United States and Caribbean each year d. Provide retail audit information that is made self-liquidating through annual subscriptions. 5. To conserve and protect natural aquatic resources. Board of Directors: 10 individuals that represent the five diving stakeholder groups, two representatives from each regular stakeholder group; A-1 Manufacturers A-2 Training Organizations A-3 Media, Associations and others A-4 Retail Dive Stores A-5 Dive Travel Destinations and Vessels

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2009 DEMA Board of Directors DEMA’s Board of Directors is made up of volunteers that devote an enormous amount of their own time to helping promote and grow the Industry. Their accomplishments during the year are many and few realize the time and effort that these devoted individuals put forth. Representing the diverse needs of all five stakeholder groups is not an easy job. In some cases the viewpoints are in direct conflict and it takes much work to find common ground. In other cases the difficulties are easier to overcome. In all cases, the decisions are well-thought out and well-grounded. The Diving Industry’s Stakeholder groups include: • • • • •

A-1 – Manufacturers/Distributors of Dive Equipment and Sales Reps A-2 - Diver Certification and Training Agencies A-3 - Publishing, Media, Dive Industry Consulting, Associations & Non-Retail Service Providers A-4 – Dive Retailers A-5 – Dive Travel and Resorts

DEMA is pleased to have the following individuals on the DEMA Board of Directors representing the Diving Industry: Charlie Bush–A-1 – Vice President Stephen Ashmore – A-1 Al Hornsby – A-2 – President Dan Orr – A-2 –Secretary Ty Sawyer – A-3 Neal Watson – A-3 Jim Byrem – A-4 Dave Riscinti - A-4 –Treasurer Keith Sahm – A-5 – Vice President Tim Webb – A-5 Board terms are three years. DEMA will next conduct Board elections beginning in December 2010.

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DEMA’s 2009 Board of Directors – Contact List Al Hornsby, President Professional Association of Diving Instructors al.hornsby@padi.com Jim Byrem, Vice President Ocean Concepts Scuba jim@oceanconcepts.com Keith Sahm, Vice President Sunset House ksahm@dema.org Dave Riscinti, Treasurer Blue Water Divers driscinti@dema.org Dan Orr, Secretary Divers Alert Network dorr@dan.duke.edu Charlie Bush Cramer Decker/Sherwood Scuba charliebush@cramerdecker.com Stephen Ashmore Tabata USA (TUSA) stephena@tusa.com Ty Sawyer Sport Diver Magazine tsawyer@dema.org Neal Watson Ocean Fest/Neal Watson Productions neal@nealwatson.com Tim Webb Caradonna Dive Adventures tim@caradonna.com

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Committees for 2009 DEMA Committees are an opportunity for volunteers to participate in the activities of the Association and to have an impact on the effectiveness of DEMA. Committees are generally made up of Board members and may include other volunteers from the diving industry. They are advisory to the Board of Directors and DEMA Staff, and bring a wealth of experience to the Association. In 2009 there are a number of standing committees helping to provide input to the Board of Directors and Staff of the Association. Having opinions and insight from the diving community is critical, and the learning curve works both ways; many volunteers learn to understand the inner workings of a large non-profit trade association, including the nuances of providing the best for all five stakeholder groups simultaneously. The following standing committees have been in operation throughout 2009: • • • • •

Finance Committee Manufacturer’s Committee Promotion (Retention/Acquisition) Committee Show Committee Legislative Committee

2009 has been a challenging year for the Diving Industry, and these committees and their volunteers have been instrumental in staying the course of DEMA’s Mission; Finance Committee: David Riscinti, Chair Manufacturer’s Committee: Charlie Bush, Chair Promotions Committee: Keith Sahm, Chair Show Committee: Neal Watson, Chair Legislative Committee: Jim Byrem, Chair In addition, ad hoc committees engaged in activities during 2009: Outreach, Chair: Industry Partnership, Chair: International Growth, Chair: Alternative Media, Chair:

Ty Sawyer Tim Webb Neal Watson Ty Sawyer

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Finance Committee – Chair Dave Riscinti (Board Treasurer) The Finance Committee provides oversight to all budgetary activities of the Association, approves the budget for the fiscal year, and reviews all Association financial transactions. DEMA’s financial standards are developed using GAAP Standards. In addition to following these high standards, DEMA also retains the services of an outside professional accounting firm to conduct independent audits of all financial activities of the Association, as well as periodic evaluations of financial data. The association’s financials are posted on www.dema.org for member review. Giving Back to the Industry One of the most important objectives of the Association is the opportunity to place money back into the diving industry for promotional purposes. Since January 2003, DEMA has carefully placed money into successful promotions that were then evaluated for their return on the investment. For example, in 2008 and 2009 to date, DEMA’s Be A Diver Pool Tour (formerly the Scuba Tour) cost about $200,000 but introduced scuba diving to thousands of people. The value of the media exposure alone, generated by the Be A Diver Pool returned to the members of the Association the following on the investment: Media Category Broadcast Exposure Print On line TOTAL

Media Impressions* 10,755,331 7,642,783 252,657,282 271,055,396

Dollar Value* $2,624,202 $51,700 Not audited $2,675,902 + on line

*Media impressions and dollar value are provided to DEMA through a third party audit. From a financial analysis standpoint, the return on investment of association dollars for the Be A Diver Pool Tour is almost 7 times the money spent, exposing diving to more than a quarter of a billion people.

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Manufacturer’s Committee – Chair: Charlie Bush The Manufacturer’s Committee represents all member manufacturers. Representatives on the Manufacturer’s Committee come from the DEMA Board and can also include non-Board members. The Manufacturer’s Committee monitors the Manufacturer’s Fund, which was established in 1994 when DEMA was re-organized to include all stakeholders in the Diving Industry. The Fund is composed of 5% of the gross receipts from DEMA Show each year and is used at the discretion of the manufacturers to promote recreational diving. The Manufacturer’s Fund has supported many different programs, investing almost $175,000 in promotions for the industry during 2009. Programs supported in 2009 include: • • • • • • •

Be A Diver Pool Tour Funding Manufacturer’s Econometric Business Index (MEBI) Be a Diver Marketing Campaign Youth Career Program Funding Ships 2 Reefs Funding PSYTE Funding/Retail Retention CORE Program Funding

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Growing the Industry - Diver Acquisition and Retention The Be A Diver Campaign

In one of the toughest economies in recreational diving’s short history DEMA continues to keep the Be A Diver campaign and recreational diving visible to the public through outreach programs that assist the diving retailer, assistance with developing a retail store’s optimum advertising and promotional mix, and free-to-member materials that provide easy solutions to cost cutting while advertising. DEMA launched the Be A Diver campaign in April 2008. It is perhaps the largest customer acquisition campaign in DEMA’s history, and is designed to drive potential consumers to the BeADiver.com website, where ALL retailers (DEMA members or not) in the US are listed, and the customer can search for a store by zip code. DEMA members are given preferential listings, and their website URL, phone number and distance from the zip are provided to consumers in alpha order under the Retail Store Locator. Non members receive an alpha listing as well, below the DEMA members store listing.

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In 2009 DEMA introduced the Matching Funds, Co-Op Advertising Program. This program matched television advertising dollars supplied by DEMA member retailers, or matched combined advertising funds put up by any combination of DEMA member retailers manufacturers, training agencies and destinations, for the purpose of conducting television advertising using the Be A Diver TV commercial. The program impacted more than 60 retail dive centers around the US in 2009, and in total DEMA has provided funding that reached millions of potential consumers, providing almost $200,000 in matching advertising funds. Combined with membersupplied funds, advertising campaigns saw about $400,000 in total television ads run regionally through member dive retailers, using both cable and broadcast TV. In addition to the :30 second television commercial, which is designed so that the last :07 seconds can be used to point to the retail store’s contact information, DEMA has provided members with professionally designed advertising materials; radio commercials, print ad templates in various sizes, poster templates, yellow pages ads, web banners and much more. To supplement the effort, DEMA has also provided assistance and information to help retail stores and others make the most of their advertising dollars using the Be A Diver materials. Several “How To� Guides are available to any interested diving professional, including a Regional Cable Television Advertising Buying Guide, Direct Mail Guide, and Be A Diver Promotional Guide (which includes a catalog of available advertising 10


materials). In addition, Dave Reidenbach (aka “Big Wave Dave”) has been trained in the use of several database tools that help member retailers locate customers, and map the area around the retail store for the best customer potential. The data from Dave’s individual store analysis can save money by avoiding non-productive target neighborhoods, and can even be used to plan the best areas for cable TV and radio ad coverage. Clever retailers realize that the Be A Diver ad campaign drives consumers to the BeADiver.com Retail Locator, but that the member retailer’s website must have a “call to action” to get the customer to act, once the store is selected from the listing on Be A Diver.com. The first place to which you should turn for help with the call to action is your training organization, manufacturer and other vendors and partners that often have first-class materials to help promote your diving and your business.

Co-op Ads for 2010 DEMA recognizes the extreme value of having DEMA members participate in the Be A Diver campaign. In fact, without that additional participation, the Be A Diver campaign cannot possibly touch enough of YOUR customers. The DEMA Board recognizes that the best return on the association members’ funds is to use them for television and radio advertising. Pending budget approval to do so by the Board, the opportunity to receive matching funds is available to all DEMA member segments, when any segment uses the funds to purchase television or radio air time for advertising as part of a retailer support campaign. For example, manufacturers may contribute money toward the media purchase for their retail dealers; training organizations may contribute money for their 11


retailer members; destinations may contribute money for retailers that sell their destination; and money may be combined by local retailer associations to purchase air time in a media buy that covers an appropriate marketing area for all participating retail stores. For purposes of the co-op program, DEMA defines “retail dive store” as DEMA member retailers which meet all of the following criteria: 1. Teach scuba diving 2. Sell scuba diving equipment 3. Provide diving equipment service 4. Have a retail store front 5. Have regular retail business hours 6. Be zoned for business where such business zoning is required 7. Provide air fills 8. Provide DEMA with a copy of the government-issued business license which permits the business to operate Like any good promotional campaign, to be successful, all of the promotional materials in the Be A Diver campaign must be used together. These sophisticated components allow DEMA member retailers to produce a comprehensive “promotional mix” that includes direct mail, print ads for newspaper, local/regional magazines, website banners, and even movie theater promotions. All of the Be A Diver components are available for DEMA members to use FREE OF CHARGE to help capture the attention of the target customer. The promotional mix should also include more than just advertising. The components of a good promotional mix include: • •

Advertising – such as radio, television and print ads through various media. Sales Promotions – Sales promotions involve the use of media and non-media pressure applied for a pre-determined, limited period of time at the consumer, with the objective of stimulating trial or increasing consumer demand, or to improve product visibility and availability. Publicity (PR) – The classic definition of “Publicity” or “PR” states that it is nonpaid-for communications of information about the company or product, generally in some media form.” While the actual appearance of the product or service in the media may be considered “free,” most publicity activities do have a cost associated with them. PR firms charge for follow up, “stunts” cost money to create, and even writing press releases can have a cost. Still, these can be very effective when used in conjunction with other promotional activities and getting the attention of the media can provide a store with far more visibility than not having it. The Be A Diver Pool is a form of publicity. Personal Selling – Diving is a relationship business, and not withstanding the sales that take place on the web, getting people to come to a store and purchase equipment or learn to dive is still largely dependent on the face-to-face selling skills employed by dive store staff. All employees should be versed in selling techniques and willing to participate in the sales process. Given that more than

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60% of all divers look to their diving instructor for guidance on what they should buy, this is especially important for the instructional staff. Television Advertising: For television advertising purchases, it is HIGHLY RECOMMENDED that the media purchase involve no more than two or three television networks or channels, and that the purchase involve cable television to attain the greatest concentration of commercial runs for the money, while reaching the highest concentration of viewers and potential customers. It is also HIGHLY RECOMMENDED that the media buy be designed using the data gathered by DEMA’s Media Research Inc (MRI) reports regarding the target audience. The retailer should customize the basic Be A Diver® television commercial using their own appropriate logo and website address. Radio Advertising: For radio advertising purchases, it is HIGHLY RECOMMENDED that the media purchase involve no more than two or three radio stations to prevent “dilution” of the funds needed to effectively reach the target customer. It is also HIGHLY RECOMMENDED that the media buy be designed using the data gathered by DEMA’s Media Research Inc (MRI) reports regarding the target audience. In addition to the above, the program particulars are as follows: • • •

The media purchase (radio, television or both) must involve one or more DEMA member retail stores. Additional DEMA members may also match funds to increase the number of participants. Pending the approved budget to do so, DEMA will match the media purchase made up to $5,000 per DEMA member retail store, per calendar year, with a maximum of $25,000 in matching funds available per media buy. Participating stores must provide DEMA with a report within 30 days of completion of the co-op advertising program, to include: o Testimonial o Metrics from Google Analytics for website traffic o For broadcast TV, dates, times and channels of commercial runs, and where possible, programming description o For cable TV, dayparts and networks for all commercial runs o For radio, dates, times and stations of commercial runs, and where possible, programming description

Retailers should customize the basic Be A Diver® radio commercial using the appropriate store name and website address. Radio Example: One DEMA-member retailer wishes to take part in a co-op ad campaign using local radio and the Be A Diver commercial and materials. The retailer has $800 to spend on the

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media purchase. In order to increase the number of commercial airings over the desired time, the retailer wishes to participate with DEMA’s co-op matching funds advertising program. In addition to the single retailer, another DEMA member business can be involved so as to qualify for the co-op ad dollars from DEMA. In this case the retailer contacts a Hawaii resort to create the following media buy budget: Retailer Destination Total Budget -

$800 $800 $1,600

In this instance DEMA will match the total member media buy budget for 1,600 with an additional $1,600. The total media buy budget is now $3,200. Television Example 1: One DEMA-member retailer wishes to take part in a co-op ad campaign using cable television and the Be A Diver commercial and materials. The retailer has $1,000 to spend on the media purchase. In order to increase the number of commercial airings over the desired time, the retailer wishes to participate with DEMA’s co-op matching funds advertising program. In addition to the single retailer, another DEMA member business can be involved so as to qualify for the co-op ad dollars from DEMA. In this case the retailer contacts a destination in the Caribbean to create the following media buy budget: One retailer Destination Total Budget -

$1,000 $2,000 $3,000

In this instance DEMA will match the total member media buy budget for 3,000 with an additional $3,000. The total media buy budget is now $6,000. DEMA members retailers are all eligible to participate with this program. The dates during which DEMA will help fund the co-op opportunity are flexible, recognizing that each area of the country has different needs. During 2009, additional Be A Diver full-page ads appeared in Latitudes Magazine (American Eagle Airlines), with a per issue circulation of 400,000, running in January, February, March and April. Editorial Exposure for Diving DEMA members also benefit through a media exposure program. DEMA has arranged to train different journalists from publications, blogs and other media that are seen/read by the target audience, creating opportunities for additional diving exposure. With the help of member retailers and diving destinations, DEMA has made sure that these

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journalists have a positive training and diving experience, and are willing to write about their experiences in their publications. These articles will result in millions of consumers receiving exposure to diving through the editorial pages of these publications. BeADiver.com – DEMA’s Customer Landing Website In 2008 DEMA’s campaign ads appeared in select print publications and a variety of cable television networks known to be seen by the target audience. All ads generated from DEMA have one thing in common – they are intended to drive the intended audience to www.BeADiver.com. Combined with member use of the logo, the Be A Diver pool, and other sources, the website remains active as a means of driving potential customers to retail dive stores.

The Be A Diver website lists all retailer stores in the US, with DEMA member stores being given additional prominence on the website. DEMA member stores receive a DEMA logo as well as being listed first in alpha order in the search engine. While DEMA did continue advertising in the early months of 2009 through airline magazines, the DEMA Board determined that the money would be best used as co-op advertising funds that impacted the retailer directly, and on a regional/local level. DEMA Members Using the Be A Diver Campaign DEMA members continue to use the Be A Diver logo and URL on their own promotional materials. This helps to keep the logo visible and in the case of destinations and resorts, encourages non-divers to consider learning to dive as part of (or even prior to) their resort experience.

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Retail Marketing Assistance One of the most exciting benefits of the Be A Diver campaign for DEMA members will continue; DEMA is providing access to a “geo-demographic” program that helps retailers find more potential customers that match the profile of the most active diving customers near by to their stores. “Big Wave” Dave Reidenbach has already worked directly with more than 60 DEMA member stores to help them use this program and “map” the locations of their customers. There are two primary advantages to using this program; it provides an understanding of where the customers are generally located, making it possible to focus television and radio marketing efforts; and it also makes it possible to purchase the addresses of these potential customers using zip codes and household data to determine where to find the greatest concentrations of potential customers. DEMA has also negotiated a very inexpensive rate through the Association for acquiring potential customer mailing lists with a high (greater than 90%) accuracy rate, which is targeted and more affordable than most mailing list vendors. As noted in the Promotions Committee Report for 2009, mailing lists are typically priced per thousand names (CPM), and in a typical mailing list house stores will pay anywhere from $0.12 to $0.25 or more per name, per use ($120 - $250 per thousand), depending on the number of filters chosen. DEMA has arranged for multiple uses over 12 months of 16


the target customer mailing starting at $30 per thousand* (a 75% discount on the mailing lists). (*price subject to change without notification). By traveling to several of the consumer dive shows, working through phone and computer, and visiting stores on site, DEMA and Big Wave Dave have delivered hundreds of thousands of names and addresses to which retailers could promote. If purchased from other sources, the data provided by this sophisticated customer location system has a value of up to $7,000, but is being made available absolutely free to DEMA members!

Pitney Bowes MapInfo速 PSYTE US Advantage Profile Report 60 mile Ring Atlanta, GA (DMA-9) September, 2008 PSYTE Code

Cluster Name

HH Count in region

% of total HH in region

Base Count of Cluster in US

% of Total US HH

Regional Penetration of Total US Cluster HH

Index

Low Density Suburban 1 LDS1_03

Nouveau Manors

78,853

3.86%

958,236

0.83%

8.23%

463.81

LDS1_09

Suburban Wave

184,387

9.03%

2,337,607

2.03%

7.89%

444.59

LDS1_22

Kids, Dogs, Vans

174,958

8.57%

2,525,670

2.19%

6.93%

390.44

LDS1_06

Balancing Acts

68,650

3.36%

1,698,427

1.48%

4.04%

227.82

LDS1_02

Executive Domain

92,875

4.55%

2,471,005

2.15%

3.76%

211.85

LDS1_13

Sierra Snuggle

50,516

2.47%

2,775,999

2.41%

1.82%

102.57

LDS1_07

Equestrian Heights

16,660

0.82%

1,368,272

1.19%

1.22%

68.63

LDS1_01

Tuxedo Trails

7,445

0.36%

862,273

0.75%

0.86%

48.67

LDS1_20

Empty Nest East

5,331

0.26%

1,540,993

1.34%

0.35%

19.50

LDS1_16

Frontier Towns

0

0.00%

857,073

0.74%

0.00%

0.00

679,675

33.28%

17,395,555

15.11%

3.91%

220.22

Total Low Density Suburban 1 * Shaded areas are DEMA Target Clusters

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From Retail Stores around the country: Dave, I just wanted to thank you for helping us through the Be A Diver Campaign Process. We had a very tough year last year (2008 revenue was down $100K from 2007 and 2007 was down $80K from 2006). Fortunately, we were able to make it through this last winter and are very encouraged about 2009. Getting hit by a tornado in 2007 added to the tough times. Fortunately, the folks at DEMA and DAN helped us out and provided much needed support. Tom Ingram contacted me personally and was very supportive. At the DEMA show in Vegas I when I learned that DEMA was introducing the matching funds for the Be A Diver Campaign, I was pretty excited because I knew it would be targeted advertising and would allow us to get the advertising we sorely needed. I spent some time focusing on what type of advertising would work best for us and as you know we chose Broadcast advertising on a major TV network (NBC). We could never have done this without DEMA’s support. I wanted to share with you some of the exciting things that we have seen from the Be a Diver television ads since they started in Jan: • So far Jan and Feb of 2009 have been our best Jan and Feb since we opened. Mar is on track to either beat or be very close to our best Mar ever. • We have seen a significant increase in our walk in traffic from new customers who have never been in our store before. • Many of our old customers have seen the commercials and decided it was time to get back into diving. This is great because some have brought in the new friends they made since they stopped diving and have convinced them to enroll in dive lessons. • We have also seen a significant increase in the number of regulators that are being dropped off for service. Service orders are more than triple what we would normally do this time of year and most are from new customers. While we know we are not out of the woods yet, we are a lot more hopeful than we were a few months ago. We can’t wait for this summer to roll around if we are seeing this type of demand already in the first quarter. We are working on an ambitious schedule for the summer. Thanks for everything, Joshua Blair Chattahoochee Scuba 706-507-2573 **********

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Hi Dave. I just wanted to get a note off to you so you know what a help the ad campaign has been. We are a small PADI 5 Star IDC Dive Center in up state New York. Our major employer has had a very tough year so far with major government contract cancellations. Despite the this challenge we had been able to sustain our revenues for 2009 at the same level as we saw last year for the first 5 months. I contribute this very positive business result to our ad campaign utilizing the DEMA co-op dollars and the Be a Diver support. Thank you Dave & DEMA for your faith and commitment to us, the dive center. Without your help we would not have the outreach we have been able to enjoy this year. Good Diving, Mike Elsner Blue Ocean Divers, LLC ********** Hello Dave: Thank you so much for all the hard work you, your staff, and DEMA does on the Be A Diver Pool Tour and Advertising campaigns. We participate in each BeADiver Pool Tour in the Chicago area because we get business from them. While the goal of DEMA is to get new people into the sport of scuba diving, we find we get so much more than that. In addition to new divers, we get people who want to get continuing education, purchase gear, have their gear serviced and travel with us. It is being in front of people who have an interest in scuba diving, that helps us so much. For those people to have the opportunity to try scuba diving on the spot at no charge is a real bonus. Especially in these challenging times when people really need to be certain they like scuba diving before making the money and time investment . At the Adventure Travel Show in Chicago recently, we signed up a father/daughter pair for scuba classes. They got their course materials at the show, paid for their class in full and went home smiling. They have upgraded their class to a private class and have purchased regulators, BC's, computers and wetsuits for both. So far, this buddy team has spent $7200 with us. And there is more to come. They will soon be heading to the Florida Keys where they will complete their open water training dives. If they had not been able to discover the world of scuba diving and pay for their class at the show, perhaps they might not have become our customers. Maybe they would not have become divers.

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Following the BeADiver pool experience at Our World-Underwater this year, we have gotten 5 new students. These shows are consistently good for us in terms of bringing in new business. The BeADiver cooperative advertising campaign in the Chicago area has had a positive impact on our business. Income from classes in February and March 2009 are up 23% compared to the same time in 2008. Our website hits are up 9% for February 2009 compared to January 2009. And in March, hits are up 20% compared to February. We have seen a spike in website hits that correlate to the times the commercials air. We have used the BeADiver advertising artwork in our successful print advertising. And we sent BeADiver postcards to targeted addresses that you supplied us with. So the bottom line is this: the BeADiver pool tour, advertising, and marketing campaigns work! Thank you very much! We look forward to continuing to work with you to help grow the business of diving. Nancy Boucha Dive Travel Manager Scuba Systems The Be A Diver Pool Tour One of DEMA’s main objectives is to promote recreational diving, and the Association has provided significant amounts of media attention to the Industry over the last several years. The Be A Diver Pool, an 18,000 gallon, 4’deep Be A Diver pool is set-up and supervised by Be A Diver pool coordinator Jeff Mohr and is staffed with volunteer instructors from DEMA member retail stores who take advantage of the unique opportunity to display their banners, distribute informative materials and promote their location to a new customer base. Potential consumers are also provided the chance to have unique face to face contact with their neighborhood dive professional and all of their scuba diving questions immediately answered. The grass-roots interactive opportunity continues to prove to be a valuable resource to participating DEMA member retailers as they continue to get new business as a direct result of their involvement. The Be A Diver Pool has received tremendous exposure, and to make it more appealing to companies outside of the diving industry, DEMA has been working with an independent auditing company since 2005 to audit all media coverage of DEMA promotional projects, such as the Pool. This is the only objective way to determine the amount of exposure and the value of the promotional projects to the Association. To date for 2008 and 2009, the independently audited results of this exposure have been:

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Media Category Broadcast Exposure Print On line TOTAL

Media Impressions* 10,755,331 7,642,783 252,657,282 271,055,396

Dollar Value* $2,624,202 $51,700 Not audited $2,675,902 + on line

DEMA’s highly visual Be A Diver Pool Tour is seen on television, various forms of print media, and on the web. The Pool Tour has also been successful in generating significant sales in the diving industry – around $1.3 million dollars annually during each of the last five years.

In order to utilize the Be A Diver Pool Tour in the most effective and efficient way possible, and to take advantage of the media attention the Pool Tour generates, DEMA began instituting a number of changes to this most visible program during 2007. Location selection, size and compatibility of the media markets, the steps taken while operating with consumer dive shows, and the direction of our public relations efforts, all played a role in acquiring the PR value of the pool. This effort continued in 2009. In addition to inviting the media to these Be A Diver Pool Tour events, DEMA can provide “b roll” (generic diving and Be A Diver Pool Tour footage) and other promotional tools to promote diving in the local media. DEMA also uses the Be A Diver Pool to support a career fair program in concert with the local school system and other activities.

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In Flight Media Associates and Delta Airlines In October 2009 the diving industry made it into the air! In Flight Media Associates planned and proposed a diving-related in-flight video, and invited many companies from the diving industry to participate. Using Be A Diver.com, DEMA joined with a destination (Cayman Islands), two training organizations (DAN and PADI), a manufacturer (Sherwood) and a hotel (Sunset House), and all agreed that to benefit the entire diving industry, the main call to action for viewers would be, Be A Diver.com. The In-Flight Media Associates productions exposed more than 2.6 million travelers on Delta Airlines to recreational diving for the entire month of October 2009.

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Show Committee – Neal Watson, Chair Beginning well before DEMA Show 2003, DEMA has been working to determine the needs of the Industry with regard to the DEMA trade show. Working directly with the members of the Board of Directors, members of the Industry at large, and DEMA Staff, the Show Committee determined the best overall time of year and locations for conducting the Show. Since 2005, the DEMA Show has been on a venue rotation between Las Vegas, Nevada and Orlando, Florida. The Show will continue to be held in the fall, and the Orlando/Las Vegas rotation will continue through at least 2011. DEMA staff and Board members are always looking for ways to maintain and increase the value of exhibiting at and attending DEMA Show. Since 2003 additional benefits have been developed for members to attend the show including significant discounts for exhibits-only and seminar entrance. Exhibitor programs include the DEMA Retailer Resource Center, and the returning Image Resource Center which focuses on the photography and video industries. This area showcases companies that are in a unique position to help the entire Diving Industry acquire more customers. Companies specializing in photography and video are exhibiting in this area, and almost all are providing FREE seminars on digital photography, video and ways for all businesses to use this popular activity to turn more people into divers. For several years DEMA has also operated a “Host/Guest” exhibitor program to help exhibitors work together during periods of business consolidation, and at the request of exhibitors and attendees, DEMA tightened the requirements for entry of professionals in the Show and strictly prohibits “suit casing” or aisle selling by exhibitors, as well as companies that are not currently exhibiting. During 2009 DEMA conducted surveys regarding the possibility of allowing consumers to enter DEMA Show, and held a Manufacturer’s Forum to discuss issues with the Show and with the Association itself. From that forum came a number of ideas, all of which are being discussed and some of which are being implemented as soon as possible. DEMA is conducting two additional Member Forums at DEMA Show 2009, and all are invited to attend to discuss the trade show and suggestions for the association: Thursday, November 5, 2009 5:00pm to 6:00pm Retailer Resource Center Booth #1601 - Mini Seminar Area Saturday, November 7, 2009 10:00am to 11:00am Retailer Resource Center Booth #1601 - Mini Seminar Area DEMA Show Among Top 200 Shows!

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In 2008 DEMA Show was again recognized as being one of the top 200 tradeshows by Trade Show Week Magazine. This ranking is due to the support of exhibitors and attendees, and because of the support of organizations that participate in the DEMA Hotel Block during the trade show. The Show Committee thanks all who participate in DEMA Show!

Site Selection and Timing of DEMA Show Site selection and timing of DEMA Show are based on the benefits to exhibitors and attendees, including hotel room pricing and proximity to the convention center, exhibitor rates for labor, and other factors. DEMA Show Attendees and Exhibitors have indicated through surveys and stakeholder meetings that Las Vegas and Orlando were among the best cities for them in which to attend and exhibit at DEMA Show. Establishing a location rotation with Las Vegas and Orlando is a reflection of DEMA customer’s needs. As a result, DEMA Shows will be held in the following rotation: 2008: Las Vegas, Nevada 2009: Orlando, Florida 2010: Las Vegas, Nevada 2011: Orlando, Florida In addition to these customer-selected venues, surveys and stakeholder meetings clearly indicate that there is a variation in timing preference; one that is dependent on the stakeholder and their business cycle, as well as their particular geographic location. Information gathered from retailers and others that have participated in DEMA’s stakeholder meetings, surveys, and other sessions, have indicated that there are two keys to encourage DEMA Show participation: hold the Show at a time when there is as little direct interference as possible with the varied stakeholders’ businesses, and make sure that the Show is conducive to conducting business. DEMA has continually focused on augmenting the benefits to attending the Show. Initiatives have included the tightening of buyer registration procedures and the production of solid educational opportunities that provide opportunities for attendees and exhibitors to learn new methods to grow their business. These benefits are in addition to the buying and selling opportunities and the chance to see new equipment as well as network on a face to face basis, all of which have been and will continue to be the hallmark of DEMA Show. Timing the Show to meet the varied geographic and business cycle needs for our industry has proved challenging. Conducting the Show in early to mid-October causes conflicts with many retail businesses, and the former late-January timing of DEMA Show in its first 25 years caused just as many conflicts with other types of businesses in different parts of the country and world. Through surveys and stakeholder meetings it became clear that the timing for DEMA Show that produced the least amount of business interference for both exhibitors and attendees is in the period from the end of October through the first several weeks in November (just prior to Thanksgiving). The Shows have now been booked as close to this time frame as possible for the venues requested by DEMA exhibitors and attendees.

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Bringing in Young Professionals In addition to bringing in young consumers, DEMA also recognizes the importance of encouraging early participation in the industry by younger diving professionals. Many instructors and professionally-certified diving leaders do not fully engage in the industry until some time after first becoming certified at the professional level. Many may not see the full extent or professionalism of the industry until they come to their first DEMA Show. Since individuals certified at the professional level (ie: instructors, divemasters, dive control specialists, and assistant instructors and others with professional credentials) have long been permitted to attend the trade-only event, DEMA developed a pilot education program for DEMA Show 2007, continuing in 2008 and 2009, to encourage these typically-younger professionals to attend. CREDENTIALS AND DOCUMENTATION ATTENDEE NON-BUYER OPTION 1 (Dive Store Staff, Travel Industry Professional, NonExhibiting Manufacturer or Other Industry Professional The Following Credentials are Required: •

Valid printed business card to include name of business under which the attendee registers, attendee name and position

AND ONE of the following: • • • •

Tax ID # for the dive-industry business under which the attendee registers. Copy of current (last 12 months) business license with name of business under which the attendee registers. Please note: If current license was sent in with your 2009 DEMA Membership payment you may skip this step. If unsure, please send in a copy. Paycheck stub issued to attendee by company under which attendee registers. Must include company name and attendee name and be dated within 90 days of DEMA Show 2009 International Identification - business registry information used in the country of origin or which permits buying in the US

ATTENDEE NON-BUYER OPTION 2 (Instructor, Assistant Instructor or Dive Master/Con, Etc.) The Following Credential is Required to Register: •

Training Agency-issued certification card including name and level of professional certification achieved

Instructors, Assistant Instructors, Dive Control Specialists and Dive Masters are NOT automatically qualified to receive a “Buyer” designation and are therefore ineligible to receive pricing information unless they can produce “Buyer” documentation. DEMA hopes to continue encouraging recently-certified professionals to attend DEMA show for the future. As with all who register for DEMA Show, these pros are required to provide appropriate documentation before entry is permitted, and they are provided only with Show credentials that are appropriate for their level of certification and qualifications.

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The “Immersion Program” consists of a one-day pass to DEMA Show, offered at a lower registration price and good only for Saturday, November 7. As with everyone attending DEMA Show, professionals obtaining the Saturday-only Immersion Pass are required to present a photo ID on site (such as a driver's license or photo diving certification card or similar) when picking up badge holders and/or badges. In addition, the following credentials are required for entry to DEMA Show 2009: Magnet Exhibitor Program – Pilot Program This program places interested DEMA-member exhibitors in strategic, pre-determined locations around the DEMA Show floor, using incentives to encourage exhibitors to participate. The pilot program takes advantage of the fact that trade show sales floors function in a manner similar to “shopping malls” which place magnet stores (in this case, magnet exhibitors) in specified areas, helping to direct the flow of attendee traffic, for the benefit of all exhibitors. The Magnet Exhibitor Program is designed: 1. To help insure that major exhibitors exhibit at DEMA show, in turn helping to attract more and better qualified show attendees 2. To assist all exhibiting companies by helping direct attendee traffic throughout the show floor 3. To provide additional return on investment to companies investing in DEMA Show through exhibit space purchases of 800 net square feet or more. Any DEMA-member exhibitor, exhibiting at DEMA Show 2009 is eligible to participate in this pilot program for DEMA Show 2010. Selection is based on magnet space availability and their seniority space selection points. There are three separate Magnet “zones” on the DEMA Show 2010 floor plan. Exhibitors that select at least 800 net square feet in exhibit space within these zones are eligible for the promotional pricing. In total there are more than 600 10x10 exhibit spaces within these three Magnet Zones. There are several benefits to all exhibitors: 1. By creating “zones” on the show floor in which “Magnet Exhibitors” are placed, attendee traffic is directed throughout the show floor to each of the zones. Traffic direction maximizes the exposure received by the other exhibitors in the path of and near the magnet zones. 2. Changing the flow of traffic allows all exhibitors to have a greater opportunity for “face time” with potential and current customers. Especially when exhibits are designed to attract these customers, get them to dwell longer, and provide more time and interaction with them, the result is a better show for all. 3. Exhibitors that recognize the value in this program also help attract professionals to attend the show. This means more attendees will be engaged in educational programs and more will be excited about buying new products and services from multiple vendors at the show.

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For Magnet Exhibitors there continue to be essential benefits of exhibiting at DEMA Show, including: • “Face time” with customers and potential customers • Attracting new persons to the industry and retailing (remember, more than 30% of all DEMA Show attendees are “first time attendees” EACH YEAR) • Support of current retailers through seminars and other contact opportunities • Show Only Sales • Future sales/sales orders • Enhanced brand image Evidence shows that a majority of retailers/attendees come to DEMA Show because they want to see new products and services from all their vendors, and they expect these vendors to support them at the show. However, in recent years some companies have altered their sales cycle and process by using a field sales force to introduce products and services to their professional customers prior to DEMA Show. While it is understandable that the marketplace has changed in the last few years, the result is that some major exhibiting companies do less selling at DEMA show, which impacts their dollar ROI. This program changes the cost/sales equation for exhibitors that wish to purchase substantial exhibit space at DEMA Show. The program provides more opportunities for exhibitors to select their space in close proximity to a major exhibitor. This helps to increase visibility for all exhibitors, as more attendees will be directed around the show floor. Magnet zones are designed to attract attendees to various areas of the show floor, and as such are not placed directly near the front show entrance. This means that additional space is available for non-magnet exhibitors near the entrance, and in locations near areas of interest, such as the demonstration pool, retailer resource center, image resource center, etc.

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Legislative Committee – Jim Byrem, Chair 2009 brought many legislative and economic changes on the national level, and on the local level in several bellwether states. Legislative efforts can be complex and require much time for monitoring, developing position statements and sometimes testifying before lawmakers and others. DEMA has devoted resources to these efforts because they benefit all members through the promotion of recreational diving, protecting diver access to diving locations, and by protecting the underwater environment. Some of the topics addressed during 2009 include: • • • • • •

Parental Releases Allowing Minors to Participate in Recreational Activities in Florida Ships to Reefs in Florida – the sinking of the Vandenberg Supporting “Listening Session” on Human/Manatee Interactions DEMA Meets Federal Legislators on Capitol Hill To Advance Small Business Health Insurance Initiative And Support The Convention Industry Be A Diver- Florida Lobster Season Public Service Announcement Comprehensive Ocean Management - Letter to the Editor

Parental Releases Allowing Minors to Participate in Recreational Activities in Florida In December 2008 the Florida Supreme Court ruled that releases signed by parents for minors cannot be used to bar legal action. In a decision that could have an impact on all specialty activities, including recreational diving and snorkeling, the Florida Supreme Court ruled on Thursday December 11, 2008 that parents cannot sign away their minor child’s right to sue a business. Specifically the Court held, “…[We] find that public policy concerns cannot allow parents to execute pre-injury releases on behalf of minor children.” Prior to this ruling, parents or guardians of minor children in the state of Florida could assume and acknowledge the risk for their children’s participation in recreational diving, and acknowledge such assumption of the risk by signing a “Release of Liability” (also called “Waiver,” “Assumption of Risk” and various other names). Acknowledging the risks provided a statutory measure of legal protection for dive operators when a minor child was injured. This Supreme Court ruling permits parents in Florida to bring suit against dive operators with regard to minor children even when a form is signed and the risk of participation has been acknowledged by a parent or guardian. However this ruling DOES NOT change the law in Florida in regard to releases executed by adults (18 years of age and older). Those releases effectively ban lawsuits by adults who assume the risk for their own participation. DEMA organized a campaign to alert retailers, charters and other dive operations, instructors, and other dive operations in Florida and all states should continue to provide

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excellent education and service and make sure that participants are aware of the risks involved with participation. Operators should continue the requirement that participants sign an appropriate written “release” document. This applies to participating adults and to parents/guardians of participating minor children. In the event of an accident or law suit, having participants sign the “release” helps to prove that they are aware of the risks prior to participation. Having participants sign the “release” is also most likely required by your affiliated training organization and insurance company. All Florida-based diving businesses were advised to discuss this ruling with their counsel, review their insurance requirements and coverage, and determine the best course of action for their individual business. This ruling has now generated the introduction of several bills to assist in reinstating the ability to have minors participate in recreational diving and snorkeling. DEMA will continue to advise members of the situation as we learn more. Ships to Reefs Legislation in Florida - USNS General Hoyt S. Vandenberg The culmination of last year’s DEMA-sponsored Ships to Reefs legislation, signed into law in June, 2008, was the sinking of the USNS General Hoyt S. Vandenberg off of Key West, Florida in May 2009. Funds to sink the Vandenberg came in part from the Ships to Reefs bill which was first proposed in November 2006 by Al Hornsby, Sr. Vice President of the Professional Association of Diving Instructors (PADI Worldwide) and President of the DEMA Board of Directors, and by attorney Bob Harris under the auspices of PADI. In January 2007, DEMA was asked to take the lead in securing passage of the legislation and retained Bob Harris as a lobbyist in Tallahassee, Florida. In conjunction with the sinking of the Vandenberg, DEMA offered an education session for Florida legislators and others, presenting information on the economic and environmental benefits of sinking ships as artificial reefs. These education sessions offered were similar to those presented by DEMA over the last five years in conjunction with consumer dive shows, DEMA Show, and others. According to one study, artificial reef sites based on sunken ships generate an average of $3.4 million in gross revenues annually. Estimates from the sinking of the USS Oriskany, sunk as an artificial reef in Pensacola in May of 2006, are more than $220 per person per day. The return on investment is more than $131 for every $1 dollar of local and state investment. Similar returns are expected from the sinking of the Vandenberg. DEMA hopes that our effort and success in getting a bill passed in Florida to help fund the sinking of these artificial reefs will inspire other states to create and pass similar bills. The Ships to Reefs bill not only provides opportunities for additional coastal marine habitat, but will also generate substantial revenue for the Florida tourism industry,

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including over 250 Florida-based retail dive centers, additional fishing businesses, hotels, restaurants, marinas and others serving the thousands of visitors who choose Florida to scuba dive on the artificial reef trail. Listening Session on Human / Manatee Interactions in Crystal River DEMA contacted retail dive stores to encourage their attendance at the Florida Fish and Wildlife Conservation Commission Listening Session, held in conjunction with the United States Fish and Wildlife Service, to gather information on human / manatee interactions in the Crystal River area and to review harassment laws as they apply to these interactions. DEMA’s involvement was to monitor and comment on the possible outcomes of such a Session, including gathering ideas on ways to better manage human / manatee interactions. Among the topics covered were A. Manatee use and mortality within the Crystal River area B. State and federal laws and regulations pertaining to manatee harassment C. Update on protection efforts related to manatee / human interaction D. Public comment regarding manatee / human interaction DEMA Meets Federal Legislators on Capitol Hill To Advance Small Business Health Insurance Initiative And Support The Convention Industry Tom Ingram, Executive Director met with members of the US House and Senate and their staffs in Washington DC on April 1, to discuss the role of associations in the current economy, the value of conventions such as DEMA Show, and how associations like DEMA can assist with providing affordable health insurance options for small businesses members. Ingram came to Washington DC as part of a national delegation of association executives, and was sponsored by the American Society of Association Executives (ASAE), and the California Society of Association Executives (CalSAE). Ingram serves on the Board of Directors for CalSAE. As Ingram explained to members of the House and their staffs, “Associations provide a means of researching the businesses they represent, provide their members with education, networking opportunities, marketing information and assistance, and help advance businesses of all sizes, contributing their survival and success.” Knowing that elected officials are not necessarily familiar with the effort made by associations to ensure their members’ continued existence, these meetings gave this national group of association professionals an opportunity to make it clear that associations do help to advance business. Ingram also explained the value of conventions and meetings such as DEMA Show. Most officials are not aware that typical associations derive greater than 50% of their revenue from the production of one or more trade shows. DEMA has a similar revenue

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structure and puts all monies earned back into the industry as well as using these monies for administration of the programs. DEMA continues to fund such programs as the Be A Diver marketing campaign, the Be A Diver Pool Tour, the matching funds co-op ad program, and all industry research, including the DEMA Certification Census. DEMA, ASAE and CalSAE also discussed the costs of health care to small businesses with staffers and elected officials. As part of that advocacy DEMA encouraged legislators to support the Small Business Choice Act, House Bill 859. This bill, which has bipartisan sponsorship in the House, would allow associations to create insurance “captives” that pool their small businesses members together in each state for the purpose of reducing the cost of catastrophic health insurance to these businesses. Under HB 859 associations could form a cooperative among members that would allow associations to offer catastrophic health insurance to employees of their members. With catastrophic health care offered under an association umbrella, the risks are spread among a larger pool of insureds, reducing the cost of both the catastrophic and basic health insurance coverage. The availability of reduced cost insurance makes it more affordable to employers. HB 859 also provides for a tax break for employers equivalent to 65% of the cost of the catastrophic insurance they offer their employees. Ingram discussed health care with staffers for Senator Diane Feinstein (D, CA) at Ms. Feinstein’s weekly constituent breakfast, and discussed associations, conventions and HB 859 with the offices of Darryl Issa (R, CA), Duncan Hunter (R, CA), George Miller (D, CA), Jerry McNerney ( D, CA), Bob Filner (D, CA), Loretta Sanchez (D, CA), Brian Bilbray (R, CA), and Dana Rohrabacher (R, CA). DEMA funds legislative efforts that help member businesses. All such support from DEMA is funded by resources generated through DEMA Show, which supports all of DEMA’s promotional programs, including DEMA’s Be A Diver® campaign. Be A Diver Florida Lobster Season Public Service Announcement DEMA Executive Director Tom Ingram, and Dan Orr of the Diver’s Alert Network (DAN) joined with officials from the Florida Fish and Wildlife Conservation Commission (FWC) and the United States Coast Guard (USCG) for a press conference at the USCG Miami Sector to unveil the first state-wide public service campaign aimed at increasing awareness of scuba diving safety to reduce or eliminate the number of incidents of bodily harm during the Florida spiny lobster mini-season. In advance of the 2009 mini-season, the campaign encouraged scuba divers to check their equipment and refresh their diving skills at a local retailer, and be mindful of safety procedures. A :30 Public Service Announcement (PSA) was made available to Florida TV networks and a 18”x 24” poster were unveiled. The poster was sent to 389 dive stores and related businesses in Florida and the adjoining coastal counties in Alabama and Georgia with the goal of reminding divers that prior to lobster season, it’s not too late to tune up their equipment and refresh their skills before lobster mini-season. The announcement was made alongside officers of the FWC and Coast Guard, unveiling Florida Governor Charlie Crist’s proclamation of dive flag awareness week.

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The video can be seen on YouTube at: http://www.youtube.com/watch?v=AAYgBadqyJA

Comprehensive Ocean Management - Letter to the Editor In September, in response to an article in the Tallahassee (Florida) Democrat entitled Comprehensive Ocean Management is Job One, by Paul Johnson, DEMA explained to Florida Legislators the importance of being responsible in the legislative process when it comes to such management of these resources. The letter explains that, “The diving industry recognizes that when marine sanctuaries and such use “zones” are designated under the National Marine Sanctuaries Act or other comprehensive management systems, it is because of specific conservational, recreational, ecological, historical, research, educational or aesthetic values. During the June 2008 testimony given by the diving industry before The Committee On Natural Resources, Subcommittee On Fisheries, Wildlife And Oceans in the U.S. House of Representatives in support of the reauthorization of the National Marine Sanctuaries Act (NMSA), we indicated that we prefer that the process for designation of these areas: 1. includes input from all user groups 2. provides for a clear balance between access and use by interested parties, and health of the resource 3. recognizes that diving and snorkeling are not inherently consumptive activities 4. does not unnecessarily restrict non-consumptive activities

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While recreational scuba diving and snorkeling are not inherently consumptive in nature, the diving industry testified before the House Sub-Committee, and maintains today, that ocean management tools such as the NMSA or other forms of ocean “zoning” should support such consumptive activities as spear fishing within the boundaries of a given sanctuary when the following criteria are met: 1. Hook-and-line fishing activities within the sanctuary are allowed and supported by sound science and sanctuary policy. 2. Sound science exists to support consumptive activities such as spear fishing 3. Sanctuary policy supports such consumptive activities 4. Non-consumptive, low intensity level activities should be allowed to continue, and should not require permitting. We also maintain that in the designation of sanctuaries and other management zones there should consistently be establishment of research areas that include no-take zones which restrict hook-and–line fishing, spear fishing and other consumptive activities, but do not exclude non-consumptive activities. We agree with Mr. Johnson that no “wild west” approach should be considered in determining the management of vital ocean resources. Hardin’s, “Tragedy of the Commons,” referenced by Mr. Johnson has been described by some as, “historically uninformed, sociologically naïve, economically simplistic, and just plain wrong.” Let’s not make the mistake of succumbing to a flawed view. We can agree that comprehensive, and responsible management with the above safeguards is the real task and job one.” Internet Tax Initiative During the NJ/Beneath the Sea Retailer meeting one retailer requested that DEMA review and prepare a position statement regarding the lack of taxes in many states on Internet-based sales. Since the Internet became a means of commerce there have been calls by some bricks and mortar retail stores to require that sales from the Internet be taxed in the same manner as those done through such bricks and mortar stores. Doing so, it is maintained, allows the bricks and mortar stores with a physical presence in a given state, to compete fairly with such stores. In a 1992 decision, Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse. (The legal term for this physical presence is "nexus.") Although the case dealt with a catalog mail-order company, the ruling has subsequently been applied to all remote sellers, including online retailers. The Court said that requiring these companies to comply with the varied sales tax rules and regulations of 45 states and some 7,500 different local taxing jurisdictions would burden interstate commerce.

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In its ruling, the Court specifically noted that Congress has the authority to change this policy and could enact legislation requiring all retailers to collect sales taxes without running afoul of the Constitution. "Congress," the Court declared, "is ‌ free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes." Today, software has largely eliminated the difficulty of calculating and remitting sales taxes for the country's many state and local jurisdictions. Indeed, Amazon.com, which opposes extending sales tax to online retailers on the grounds that it would be "horrendously complicated," collects sales taxes nationwide for Target as part of its management of the chain's online business. It is important to note that, while remote sellers are not required to collect sales taxes, the tax is still owed by the individual who made the purchase. Individuals are supposed to keep track of these purchases and pay an amount equivalent to the sales tax as a "use" tax on their state tax returns. Few people do, however, and the use tax is almost impossible to enforce, which effectively exempts these purchases. After discussion and research, it is clear sufficient funding is not available through the diving industry to have a significant impact on this issue at this time. Research DEMA continues to conduct various ongoing research projects. Research can typically be broken down into primary (conducted directly by DEMA) and secondary (research conducted by another source). For some projects DEMA has relied on member-owned research which has proven to be dependable for projects within the diving community itself. For projects that require additional corroboration of results, DEMA has sponsored primary research that provides data which can be confirmed by a third party. Certification Census Thanks to the certification organizations data has been made readily available regarding the number of divers certified each year. Starting in 2003, DEMA began gathering the data on Open Water level diver certifications (as defined by the Recreational Scuba Training Council –RSTC) as a measure of growth for the Industry at large. This is an important statistic for the Industry, especially at the level of entry certifications as it is indicative of the health of the sport. The cooperative effort between all of the reporting certification agencies includes reporting their certification information to an independent, third party auditing firm. The numbers are reported to DEMA only in total after the third party auditing firm does a thorough review of the data and removes any duplications that appear across agencies. This process is designed to make the Census totally anonymous with regard to training agencies and to produce an accurate accounting of the totals within the US. Neither the DEMA Office nor the DEMA Board ever sees the individual agency totals, only the

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aggregate total. Updated certification census data is available at www.dema.org and state by state data is available to DEMA members. Certification Census for 2008* 60000 60000

54286

50000

42653

50000

40000 40000

30000

28282

28049

30000 20000

56532 44939

10000 20000

30542

28236

0

10000

2008

0 1Q

Q1 2QQ2

Q3

Q43Q

4Q

Manufacturer’s Econometric Business Index (MEBI) For more than 20 years DEMA has gathered and reported data on sales at the manufacturing level. The data is reported by those manufacturers that voluntarily participate in the program and is gathered by a third party administrator on a monthly and quarterly basis. The individual manufacturer’s information is kept confidential and only the aggregate is reported to participating companies. Data from the ongoing MEBI research program is used by manufacturers to compare their sales with those in the Industry, to help understand market share information, and to help determine trends. Domestic 2007-2008-2009 To Date 16,000 14,000 2009 to Date

10,000 2008

8,000 6,000

2007 4,000 2,000

U SE S T PT EM B ER O C TO B ER N O V EM BE D R EC EM BE R

LY JU

UG A

NE JU

M A Y

A PR

IL

0 JA N U AR FE Y B R UA R Y M A R CH

Shipments

12,000

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Customer Research In 2006 DEMA first introduced the idea of Lifestyle or “Psychographic” data to the diving industry as a means of understanding more about the potential diving customer. Data was gathered from the customer data bases belonging to training organizations, manufacturers, retailers, destinations and the media to understand more about the most active or “alpha” diving customer – the one that spent the most on the sport and was most regularly involved in recreational diving. More than 308,000 customers were viewed in this study. The data gathered in 2006 revealed the picture of the most active diver having the following profile: • Age – Between 38 & 53 years old – Mean: 45 Median: 46 • 76% are male • Household Income – 56% make between $75,000 and $100,000 • Occupation – 80% are White-Collar/ Professional/ Technical/ Management • Home ownership – 93% own their own home • Home mortgage median amount – $148,000 • Marital Status – 71% married • Presence and age of children – 17% have kids under 18 DEMA uses a well known database (AnySite and PSYTE) depicting psychographics/lifestyle. The most desirable potential customers fit the following descriptions:

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In 2009 DEMA participated with a follow up research program using manufacturers only. Most retailers count heavily on the sale of equipment to be profitable, and the need to understand the equipment-buying consumer is critical as part of the on-going understanding of the diving industry. Results are preliminary at this writing, but based on around 100,000 diving consumers that have bought equipment between 2006 and 2009, the following lifestyle groups are emerging as equipment buying consumers (in quantity order):

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1. Executive Domain 2. Sierra Snuggle 3. Suburban Wave 4. Active Seniors 5. Changing Places

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Meetings and Other Activities During 2009 DEMA conducted several meetings around the country, to discuss ideas to cope with the economic situation and its impact on the Diving Industry. In addition to discussing the issues if staying visible to get through the recession, saving money through the use of Be A Diver pre-prepared advertising materials and other strategies, DEMA also brought in representatives from the Small Business Administration and local lending institutions to discuss how the federal stimulus package may impact the diving retailer and others. This was also an opportunity for retailers and others to discuss other DEMA business, including the trade show and the association’s overall strategy to help the industry survive in this economy. Meetings were held in conjunction with some of the regional consumer dive shows such as Beneath the Sea, The Long Beach Scuba Show and the WA Dive and Travel Show and others. Thanks to all those show organizers for allowing DEMA to bring the retailers together to discuss these important issues!

DEMA also conducted a Manufacturer’s Forum, and in addition to the General Member Update, is conducting a Board Listening Session just prior to DEMA Show 2009, as well as two Member Forums during the show itself. The goals is to provide the best opportunities for all to provide input for the direction of the show, as well as the direction of the association.

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2009 DEMA Annual Report