Report Introduction
The Cline Group independently commissioned a nationwide study of the diving industry in August, 1993. The study surveyed retailers, selected from a random list of all U.S. dive retailers. A random, representative sample was drawn from a list of all dive retailers listed in all Yellow Pages and Business Pages phone directories in the United States. This sample list is assumed to be the most accurate retailer list available. Individual respondent selection was conducted via computer-generated random number selection methodology, ensuring a random and unbiased sample.

One hundred dive retailers were surveyed for this study, with the following objectives:

1. Study the relationship between dive retailers and diving manufacturers to determine:
• How many different major brands of dive equipment the average retailer offers to their customers.
• Which brand or manufacturer retailers sell the most.
• Retailers perception of what percentage of diving customers enter a store with a specific brand or manufacturer in mind before purchasing.
• How manufacturers can help retailers sell more diving equipment to their customers.

2. Study how dive travel has impacted the average dive retailer and how big the market is by:
• Creating a baseline of dive travel data for yearly analysis.
• Determining how many trips are conducted, at what cost, and how many people travel each year on dive trips, both within the U.S. and outside.
• Determining how much is spent yearly, with all dive retailers, for the total dive travel market.
• Determining the percentage of retailers that are actually conducting international and national dive trips.
• Determining how retailers book their group dive trips, what factors are involved in selecting the destination and what resorts can do to help retailers sell more dive travel.

3. Create a profile of the typical dive retailer's gross income, their advertising expenditures, DEMA show participation and how they primarily advertise for customers. This analysis not only incorporates the tabulated data from this study, but also data collected from other previous diving consumer studies. The second study referenced in this report was conducted for John Englander of the Underwater Explorer's Society (UNEXSO), of Freeport, Grand Bahama. The UNEXSO study took place in October of 1992, where 10,000 surveys were mailed to diving consumers. As a result, the data collected from that study is, in this organization's opinion, the most valid diving consumer data ever collected, due to the large sample size and the highly unbiased nature of the sample. Only a small portion of the data has been authorized for reprint and analysis in this report, and will be referenced in the appropriate section of this report. What makes this study unique to the diving industry is that this data is not only based upon surveying diving retailers, but also the largest diving consumer sampling in the history of the diving industry as well.
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Executive Summary
This section contains a brief overview of selected findings from this study. Summary is as follows:

Number of Diving Manufacturer Brands Stocked

1. (Q1) The average retailer stocks slightly over 7 different brands of diving equipment. Stores in the western states stocking the most (8.04) and stores in the central states stocking the least (5.4).

2. (Q2) U.S. DIVERS was reported as the most often sold equipment manufacturer (22.1%) and SCUBAPRO making a close second (21.1%). Dacor and Sherwood tied for the third most often sold brand (12.6%). However, SCUBAPRO overtook U.S. DIVERS as the most often sold brand in stores among the western states.

Percentage of Consumers with Brand Pre-Selection

3. (Q3) Overall, retailers reported that 33.7% of all their customers come into their stores with a pre-conceived brand or manufacturer in mind before purchasing a piece of equipment.

How Diving Manufacturers Can Help Retailers Sell More Equipment

4. (Q4) When dive retailers were asked how diving manufacturers could help them sell more diving equipment, the number one response was for manufacturers to conduct more non-diving advertising (43.8%). The second largest response was for manufacturers to be more concerned about the retailer's profitability, and improve the working relationship between the manufacturer and the store (23.6%). This response encompassed a variety of issues, but primarily dealt with retailers' feeling that manufacturers were not as concerned about their profitability as they should be. The third and fourth responses tied with retailers believing manufacturers need to supply them with more technical information about their products and equally provide them with promotional and marketing assistance (20.2%).

National & International Dive Travel Profiles

5. (Q9a) 75% of all retailers responded that their stores sponsor at least one international trip each year. This number peaked with stores in the central states at 87%. The average retailer that conducts international dive travel, sponsors an average of 5.11 trips outside the U.S. each year.

6. (Q9b) 72% of all retailers responded that their stores sponsor at least one national trip each year. Again, this number peaked with stores in the central states at 87%. The average retailer that conducts national dive travel sponsors an average of 21 trips inside the U.S. each year. The number of trips peaked in the western states at nearly 30 trips and dropped the most in the central states to almost 9 trips.

7. (Q10a) Retailers reported that the average group size for trips outside the U.S. was 14 divers. The average reported group size for trips inside the U.S. was 19 divers (Q10b).

8. (Q11a) Retailers reported that the average price for trips outside the U.S. was $1,351.97. The average price for trips inside the U.S. was $269.57. (Q11b).

Factors in Selecting a Dive Destination

9. (Q12) Retailers, on average, book almost 61% of all their travel directly with dive resorts. Stores in the eastern states even peaked higher with almost 74% booking directly with dive resorts. The second largest source for bookings was with travel wholesalers (32%) and travel agents reported as the third (26%).

10. (Q13) Retailers responded that the two most influential factors in choosing a destination for group travel was a destination's overall price (39.7%) and the quality of the diving (38.5%). Facilities were reported as the third most important factor in selecting a destination (23.1%).

How Dive Resorts Can Help Retailers Sell More Dive Travel

11. (Q14) When retailers were asked how dive resorts can help retailers sell more travel, they responded that they needed more brochures or information about a given resort (16.7%). The number two response was for resorts to provide better customer service to the retailers and their customers (13.3%).

Retailer DEMA Attendance

12. (Q5) When asked how often retailers attend the DEMA show, 77% responded that they attend each year, 12% indicated they attend every other year and 11% responded that they rarely or never attend.

Retailer Advertising Methods & Yearly Budget

13. (Q6) Retailers responded that their most common form of retail advertising utilized was the Yellow Pages (36%). Referrals and word of mouth advertising placed second (27%), with the stores mailing or newsletters programs placing third overall (26%).

14. (Q8) Retailers responded that their average yearly advertising budget was slightly over $15,000. Advertising budgets in the western states peaked at almost $20,000 per year, with stores in the central states reporting the smallest budgets at almost $13,000.

Retailer Yearly Gross Revenues

15. (Q15) Retailers responded that their average yearly gross sales were almost $458,000. Again, stores in the western states peaked at almost $529,000 per year, and stores in the central states reporting the smallest revenues at almost $343,000.

Total Estimated Retailer Revenues

16. (Section A) The total dive retailer generated expenditures are estimated to be slightly over $1 billion. Of this figure, approximately $347 million is from dive travel sales.

Total Retailer-Generated Dive Travel Revenues

17. (Section B) The estimated $347 million in retailer generated yearly travel expenditures breaks down as follows; $170 million from international dive trip sales; and slightly over $177 million from national dive trip sales.

Total Estimated U.S. Consumer Dive Travel Expenditures

18. (Section C) From the data collected through this report, and in conjunction with a previous consumer study, all dive industry travel expenditures by U.S. consumers, from retailers and other booking sources, is estimated at roughly $1.7 billion annually.

Total Estimated Number of Dive Travelers

19. (Section D) There are a total estimated 3.8 million dive travelers each year vacationing to both national and international destinations.

Total Estimated U.S. Consumer Dive Industry Expenditures

20. (Section E) As a result of this study, and in conjunction with a previous consumer study, all U.S. consumer diving industry dollar expenditures - for equipment, instruction and travel - are estimated to total roughly $2.4 billion annually.
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Statical Tolerances of Survey Data
In interpreting survey results it should be kept in mind that all surveys are subject to sampling error, that is, the extent to which the results may differ from those that would be obtained if the entire dive retailer population in the U.S. had been interviewed. The size of such sampling errors depends largely on the number of interviews.

The following table may be used to determine the allowances that should be made for the sampling error of a percentage. The computed tolerances have taken into account the effect of the sample design upon sampling error. They may be interpreted as indicating the range (plus or minus the figure shown) within which the results of repeated samplings in the same period could be expected to vary, 90% of the time, assuming the same sampling procedure, the same survey execution, and the same questionnaire were used.

Recommended Allowances for Sampling Error of a Percentage In Percentage Points (at 90 in 100 confidence level for a sample size of 100) 1

Percentages near 10...5.0
Percentages near 20...6.6
Percentages near 30...7.6
Percentages near 40...8.1
Percentages near 50...8.3
Percentages near 60...8.1
Percentages near 70...7.6
Percentages near 80...6.6
Percentages near 90...5.0

1 The chances are 90 in 100 that the sampling error is not larger than the figures shown. The table should be used as follows: If a reported percentage is 22, look at the row labeled "percentages near 20". The number at this point is 6.6, which means that the 22 percent obtained in the sample is subject to a sampling error of plus or minus 6.6 points. Another way of saying it is that very probably (90 times out of 100) the average of repeated samplings would be somewhere between 15.4 and 28.6, with the most likely figure of 22 obtained. All sampling error rates listed in this study are well within acceptable tolerances for a survey of this nature.
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Methodology
Questionnaire Development The dive retailer questionnaire was developed by Cline Group's research director, Dr. Stewart Shapiro and William Cline. Prior industry experience in conducting market studies, as well as specific diving industry expertise was applied to the creation of this survey to ensure accurate data were collected in the most efficient manner possible. This study incorporated phone surveys to accomplish the stated objectives. A copy of the survey is included in the Appendix of this report. Questionnaire Administration To accomplish the outlined goals, 100 dive retailers were randomly selected from a list of all scuba diving retailer stores residing in the Continental U.S., Alaska and Hawaii. As a result, the responses are anticipated to indicate how all dive retailers would respond if asked the following survey questions.

Phone interviews were conducted over a 4 day period (August 16 to August 19, 1993). A total of 309 calls were attempted, with 209 calls being terminated at some point before or during the survey. 100 surveys were completed and tabulated under the supervision of Cline Group's research department. All participating respondents were required to finish and complete the entire survey, no partial surveys were tabulated or counted in the sample.

Data Analysis and Report Generation As outlined in the report introduction, this study incorporates data collected from this survey as well as data from a previous large-scale consumer survey conducted for UNEXSO. The second study's data is necessary to create the industry-wide projections contained in Section VII, 'Derived Dive Industry Analysis'. Analysis is limited to the data contained in this report. All previous studies (with the exception of the UNEXSO study) within the industry were not utilized for any of the analysis in this report. Therefore, this study will be repeated each year at approximately the same time (August or September) to create an trend analysis of this data over the next several years, thereby creating an accurate picture of growth or decline within the diving industry.
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Sampling Issues
Selection criteria for the sample was drawn from a list of all diving retail stores in the U.S. A random computer-generated 'N'th' sampling technique was used to select the subjects for survey.

Geographical Groupings for this Study

As this study involves a limited number of retailers, three geographical breakdowns were selected for comparison purposes. However, as some of the segmentation data involves very limited numbers, caution should be exercised when viewing the geographical segmentation data contained in some of these responses. The geographical segmentation portions of the responses will, however, give a good indication of the general attitudes and responses for the specified areas.

Retailer Study Results
Following are various notes that will help in interpreting the charts, tables and conclusions within this report:

1. The responses to each question are grouped according to similar classifications and are listed in numerical order of response. The total number of subjects responding to each question are also indicated.

2. All answers are listed in percentages or mean (average) figures for a given response. Questions 4, 6, 12, 13 and 14 responses total more that 100% due to survey subjects responding with multiple answers. The actual number of responses are listed after each percentage breakdown and labeled 'Base'.

3. After each question's response, a chart or series of charts are displayed to graphically represent significant portions of the data.

4. Where there is a significant finding, a subjective analysis of the data is given for application of the reported findings.

5. All data analyzed within this report is taken directly from the survey collected for this study, however, within later sections, a previous consumer study will be clearly identified and referenced for projecting total industry expenditures and other projections.

6. Although the 'Overall' classification contains the outlined error rates, caution should be exercised in interpreting any geographical segmentation with a base of less than 50 retailers. The geographical breakdowns are provided for a point of reference only, the main trends and analysis will be focused on the 'Overall' heading, or the total response for a given question.
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The results from this retailer study are as follows:

Section A. Diving Equipment Manufacturer Relationships

When the segmentation chart is viewed, nearly 60% of the central states answered this as their number one response as well. The second area desired is improved or better retailer service, more concern about retailer's profitability and an overall improved working relationship with the manufacturers (23.6%). Many retailers resented the feeling that they are being 'sold' items or quantities that are detrimental to them as retailers, therefore blaming the manufacturers for not doing a better job of educating them in proper stocking and ordering techniques. Stores in the western states felt this 'customer service issue' was more important (38%) than even more non-diving advertising (24%).

The third area identified that would help them sell more equipment was for manufacturers to provide them with more technical information about various products (20.2%). This desire for more technical information includes needing equipment articles or specification sheet reprints for in-store distribution or mailing with newsletters. Overall, retailers felt that manufacturers could do a better job of supplying them with more technical information intended to make the store personnel more versed in the various technologies and product specifications, thereby making them more knowledgeable about the products, and better salespersons. Again, the western states peaked at almost 50% for this response. Also tied for third is the retailers need for more marketing or promotional support (20.2%). This response deals with retailer's desire for more product-specific marketing expertise and education from the manufacturer. This support includes seminars, flyers, on-site visits and joint manufacturer/retailer in-store promotionals. The fourth response was the retailers desire for better pricing structures or terms, better (lower) quantity discounts and more incentives for the retailer to stock and sell a particular brand or product (14.5%).

Better product quality control and more a timely distribution systems were tied as the fifth highest responses (11.2%). Retailers believe there are several problems with the pricing structures, especially related to quantity discounts and timely distribution of new products for the summer selling season. One retailer summed it up by saying that they were frustrated by the fact that the orders are placed at DEMA for new products, and delivery is not until September or October, after the Summer. Stores in the eastern states identified that the quality control issues was more important (19.6%), while retailers in the western states identified that the distribution problems were more of concern (14.3%).
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VII. Derived Dive Industry Analysis Section
Introduction: This section involves analyzing data from the previous questions and responses. All data is derived from this study, unless otherwise noted. The only exceptions are extracts of data from the previously mentioned UNEXSO consumer study.

Section A. Total Estimated Consumer Expenditures in U.S. Dive Retailers

This estimate is derived by multiplying the average gross income stated by retailers by the number of U.S. dive retailers.

Total Estimated U.S. Retail Revenues:

Notes: The number of dive retailers is derived from a count of all dive retailers listed in the Business Pages and consumer Yellow Pages of every city's phone book throughout the continental United States plus Alaska and Hawaii. Approximately 7% of all stores were removed, accounting for boat docks, general sporting good stores and other non-bonafide retailers. This list is known to be the most comprehensive dive retailer list available, as it relies on telephone book listings, rather than certification agency listings.

The above number, one billion dollars, is very close to what PADI, DEMA and others in the past have estimated for the diving industry. However, this figure does not take into account any non-retailers sales, such as mail-order, travel agent, dive travel wholesaler or resort-based retail sales. As will be shown, this one billion dollar figure represents only diving-related expenditures generated through all U.S. dive retailers, and not the entire industry's revenues.
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Section B. Retailer-Generated International Dive Travel Market Synopsis and Analysis

This study collected the average number of trips, travelers and average trip prices booked each year by dive retailers. When this data is applied to the entire market, the total number of international dive travelers and their associated dollar volume expenditures can be derived. These calculations are as follows, with each question referenced for source data:

International Yearly Market Analysis (some numbers are rounded for display purposes)

Notes: The above $168 million represents the total dollar expenditures of all international dive travel. However, most of this number is paid out by the retailer (either directly or collected on behalf) for airfares, hotels and resort diving fees. This number does represent an estimate for the total international dive travel expenditures within all U.S. retailers by diving consumers. As pointed out, this $168 million figure does not represent any bookings by consumers with travel agents, wholesalers or direct with the resorts.
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Section C. Retailer-Generated National Dive Travel Market Synopsis and Analysis

Just as the international figures can be determined, in the same way the total retailer-generated national dive travel market can also be determined. Again, when the average number of national dive trip bookings, trip sizes and trip prices are analyzed for national travel, the total retailer-booked national dive travel market can be estimated. These calculations are as follows, with each question referenced for source data:

Notes: National travel would be any trip where the retailer charges for diving, whether it be a one day trip (i.e. boat charters) or a multiple day dive trip (i.e. Florida Keys trips). The above $177 million represents the total dollar expenditures of all national dive travel. Again, as stated, most of this figure is paid out by the retailer (either directly or collected on behalf) for airfares, hotels and resort or boat diving fees. As pointed out, this figure does not represent any bookings by consumers with travel agents, wholesalers or direct with the resorts or boat operations.
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Section D. Combined Dive Travel Market Synopsis and Analysis

Once both the total retailer-generated international and national markets are known, a total combined expenditure figure can be derived. These calculations are as follows, with each question referenced for source data:

Notes: As illustrated, the total estimated dollar amount for dive travel expenditures in all U.S. retailers is nearly $345 million. Again, this figure does not account for any non-retailer bookings in any form, just the total amount spent through dive retailers each year by diving consumers.
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Section E. Total Dive Travel Industry Expenditures
The previous four sections involved tabulations and calculations of data collected from this study. From this data, the total numbers in dive travel (bookings, group sizes and dollar expenditures) have been limited to those customers that choose to use a retailer to book their dive travel. Therefore, our picture or window we have been viewing only allows us to see a very limited picture or part of the actual Ôdive travel world'. To determine the size of the entire dive travel market, for both retailer and non-retailer bookings, one would need to know the total number of active consumers traveling, and the average trip price. If this was known, the two numbers could be simply multiplied together to arrive at the answer. However, one element is missing; an accurate count of the total number of active traveling dive consumers. But, if we knew what percent of all traveling consumers booked through a single source (i.e. the retailer) and we had a rough idea of the average trip booking information (price, number of travelers, number of trips, etc.) we could then accurately estimate the total market. Since there are a very measurable, finite number of dive retailers, and we know how many sell dive travel and at what cost and booking level, we only need to know what percentage of all traveling consumers book through the retailer, then the entire market could be calculated.

Fortunately, the Cline Group conducted a study for the Underwater Explorers Society (UNEXSO) in the Fall of 1992, and one of the questions asked this precise question. Thanks to special permission from John Englander, President of UNEXSO, this data has been authorized for reprint in this report. The UNEXSO consumer dive travel study is the most comprehensive dive travel study ever conducted in the recent years within the diving industry. The actual study involved mailing 10,000 surveys to consumers that were subscribers of diving magazines. One thousand completed surveys were tabulated. This study is unique in that it utilized multiple publications' subscriber bases, therefore allowing an accuracy unparalleled to date. The exact question we will use for this analysis dealt specifically with how consumers booked their dive travel. The question and the associated responses are as follows:

Q. How did you make your reservations for your last dive vacation?

Notes: As indicated, 20.4% of all diving consumers book their travel through the dive retailer. Therefore, it can be said that the dive trip information calculated from this retailer study only represent 20.4% of the entire dive travel market. Based upon this number (20.4%), the actual size of the entire dive travel market can be calculated by dividing the percentage that book their travel through the retailer by the actual dollar volume that book dive travel through the retailer:

Note: This table assumes that the same average dollar expenditures are spent on travel booked through other sources as are booked through dive retailers. Actual Market Distribution By Type of Travel Once the actual total dive travel dollar volumes are calculated, both the national and international markets can be estimated based upon the data collected in this study:

Type of Travel Dollar Volume Generated Through Retailers Possible

Projected Percentages of Whole Market

Notes: According to the above estimations, the total $1.7 billion dive travel market could potentially breakdown almost evenly between national and international travel. This assumes that the retail purchasing environment reflects the entire market as a whole. If that is the case, then the above percentages could be assumed to accurately reflect the actual dollar volume breakdown for all dive travel.
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Section F. Total Number of Industry Travelers

Again, once the actual percentage of people that book travel through the dive retail is known (20.4%), aside from dollar volumes, the total number of travelers can also be calculated by using the data collected from the retailers as follows:

Total Number of Travelers Estimation Booking Source

Percent of Market Equivalent Traveler Volume

Note: Again, this table assumes that the same average number of travelers are booked through other sources as are booked through dive retailers. Notes: Again, by using the known percentage of all diving consumers that book travel through dive retailers, and then surveying retailers as asking how many people they book each year on trips, the total number of travelers can be derived. As indicated, this study found that approximately 780,000 consumers use dive retailers for booking dive travel (from Section D). If this number is divided by the percentage that book dive travel though retailers (20.4%), a total dive travel market of slightly over 3.8 million travelers can be estimated. Actual Market Distribution By Type of Travel The total number of dive consumers could potentially breakdown as follows, based upon the data collected in this study:

Type of Travel Total Number of Travelers That Book Through Retailers Section

Notes: According to the above estimations, the 3.8 million dive travelers could potentially breakdown with 16% of all travelers taking international trips and the remaining 84% composing national trips. This assumes that the retail booking environment reflects the entire market as a whole. If that is the case, then the above percentages could be assumed to accurately reflect the actual dive travel market breakdowns. The national trips above would include daily boat charters, weekend inland trips or any other national trips paid for through the retailer.
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Section G. Total Diving Industry Expenditure Estimation

Once the total dollar volume for dive travel can be calculated, and the exact percentage and dollar volume of travel booked through retailers is known, then the total U.S. diving industry can be estimated as follows: