MarkeTrak VI: Hearing Aid Industry Market Tracking Survey 1984-2000 Sergei Kochkin, Ph.D. Knowles Electronics, Inc. February 27, 2002

MarkeTrak VI:Hearing Aid Industry Market

Tracking Survey 1984-2000

Sergei Kochkin, Ph.D.

Knowles Electronics, Inc.

February 27, 2002

Method• National family opinion panel

– 80,000 households • Balanced to key census variables

– HIA survey in 1984 used NFO– All MarkeTrak surveys

• Screening Question – Phase I (November 2000)– “Does anyone in your household have a hearing difficulty in one or

both ears without the use of a hearing aid?”– Physician screening for hearing loss during last physical within last six

months.– Self, Spouse, Other, Child (Under age 18)– 15,800 hearing-impaired individuals– 72% response rate

Method• Hearing Aid Owner Survey - Phase II

– Detailed questionnaire 3,000 hearing aid owners based on Phase I response.

– Response rate 87%

• Topics:– Customer satisfaction (more than 50 areas)– Hearing aid usage (e.g. hours worn)– Use of ALDs– First time user influences– Brand selection– Factors impacting choice of audiologist/dispenser– Suggestions for improving hearing aids – Perceived quality of life changes– Use of computers in hearing healthcare

Hearing Aid Market Penetration has Historically been low (1 in 5).

23.8

22.9 22.6

21.3

20.4

22.2

18

19

20

21

22

23

24

25

1984 1989 1991 1994 1997 2000

% P

enet

rati

on

Recent advances due to VA and Direct mail

Hearing-impaired User & Non-user Population

0.8 0.7 1 0.9 0.7

4.9 5.1 4.6 4.7 5.6

19 20 20.621.7 22.3

0

5

10

15

20

25

1989 1991 1994 1997 2000

Mill

ions

Non-users Users Non-owners

Hearing Loss Population by Age GroupOwners versus Non-owners (2000)

0 1 2 3 4 5 6

Millions

<18

18-34

35-44

45-54

55-64

65-74

75-84

85+OwnersNon-owners

Clinton Announcement Spurred “Baby Boomer” Potential Market Growth

3

3.5

4

4.5

5

5.5

6

6.5

Mil

lio

ns

35-44

45-54

45-64

65-74

75+

1994

1997

2000

• Clinton news release 10/97.

• M5 Survey taken 11/97.• Age 45-54 hearing loss

growth =23%• $60k growth =35%• Some college growth =

30%• Growth continues.• But penetration among

“Boomers” unchanged.

Huge Baby Boomer wave

Little Change in Market Penetration by Age Since 1989

<18 18-34 35-44 45-54 55-64 65-74 75-84 85+

Year

0

5

10

15

20

25

30

35

40

45

50

55

60

% O

wn

hea

r in

g i

ns t

rum

ents

Year1989

1991

1994

1997

2000

Physician Screening for Hearing Loss During Physical Exam

15.116.3

18.8 1816.6 16.6

14

20.2

0

5

10

15

20

25

May-89 Nov-89 May-90 Nov-90 Jan-92 Dec-94 Dec-97 Dec-00

Per

cent

scr

eene

d

HIA Targeting with PhysiciansHIA Targeting ceases

Binaural Penetration Trend

22

37

51 52

6064

25

47

6165 65

7470

79 79

85

0

10

20

30

40

50

60

70

80

90

1984 1989 1991 1994 1997 2000

Total Owners

Total Owners - Current

Bilateral loss Ss - Current

Hearing Instrument Fittings by Perceived Profession

22

4.8

66.4

6.9

65

2.1

28.8

4.1

0

10

20

30

40

50

60

70

Audiologist Physician H.I.S Other

% F

itti

ngs

19841991199419972000

Hearing Instrument Fittings by Source of Distribution

0 10 20 30 40

Audiology office

Hearing aid store

ENT office

VA

Home

Family Dr.

Other

Hospital

Department store

Clinic

Military

Mail

% purchases

20001997

Mail Order has grown 91% since 1997; 124,000 hearing aid users.

VA has grown 83% since 1997; 411,000 hearing aid users.

Current Hearing Aid Owners by Source of Distribution

Audiologist's Office45.6%

Hearing Aid Store23.2%

Ear Doctor's Office8.6%

Vet. Admin.6.5%

Home3.6%

Clinic2.8%

Department Store2.4%

Other2.4%

Mail order2.0%Hospital

1.8%

Military1.0%

Family Doctor's Office0.3%

Total Users = 6.35 million

Factors Impacting Choice of Dispensing Practice (n=2,251)

(Importance scores =4-5 on 5 point scale)

77

64

63

63

59

52

51

50

46

41

31

Professional staff

Convenient location

Convenient hours

Price

Free hrg screening

Range of hearing aids

Physician referral

Live demonstration

Insurance coverage

Previous purchase

Friend recommended

0 10 20 30 40 50 60 70 80 90 100

% highly important

Third-party Payment Trend

20.4 22.2 21.116.2

2327.5 28.6

0

5

10

15

20

25

30

35

1984 1984 1989 1991 1994 1997 2000

% o

f sa

les

Average Retail Price Paid by Consumer (includes free, direct mail hearing aids, & third-party discounts)

0100200300400500600700800900

1000

Total BTE ITC ITE

Dol

lars

19891991199419972000

+67% +61% +70% +53%

Price increase % since 1994

Age of Hearing Instrument

05

101520253035404550

% o

f sal

es

<2 yr 3-4 yrs 5-6 yrs 7-8 yrs 9+ yrs

1991199419972000

Mean age of instruments:

1991 = 3.1 yrs

1994 = 3.7 yrs

1997 = 3.8 yrs

2000 = 3.8 yrs

First Time User Rate

53.4

40.5

29

39

31.6

0

10

20

30

40

50

60

Per

cen

t of

sal

es

1989 1991 1994 1997 2000

FDA/FTC

Issues

Beltone’s Eddie Albert Ads

Factors Influencing New First Time Users to Purchase

• Factors less than 10% mentions:– Ad-magazine (3%)

– HL Literature (2%)

– Boss/co-worker (5%)

– Newspaper (6%)

– Direct mail (5%)

– Ad - TV (2%)

– Ad – radio (0%)

– Telemarketing (0%)

% New users

68.5

45.2

40.5

22.1

17.4

12.1

11.6

11.6

0 10 20 30 40 50 60 70 80

H.L. worse

Family

Audiologist

ENT

H.I.S.

HA Owner

Family Doctor

Free HA

Physician Recommendation Trends

0

5

10

15

20

25

30

% o

f n

ew u

sers

89 91 94 97 20

Family

ENT

• 1989 - HIA advertising to physician.

• Current initiatives:– AAA Best Practice– BHI Referral program

• Trends + , but not enough.

• Family doctor – single most important influencer of hearing aid purchase.

Factors Influencing New First Time Users to Purchase

• Notable changes since last MarkeTrak:

– Audiologist influence increased to 40.5% - up from 26% in 1997.

– ENT influence increased to 22.1% - up from 10.8% in 1997.

– “Free” hearing aid influence nearly doubled.

Factors Considered Helpful or Reliable When Choosing Brand of Hearing Aid (n=2,273)

(Helpfulness/reliability scores =4-5 on 5 point scale)

766160

5549

463736

2625242220

1615

1110

Medical doctor recommendationAARP recommendationManufacturer websitesH.I.S. recommendation

Other hearing aid owner recommendationAudiologist recommendation

Consumer reportsScientific papers

Magazine articlesBooks on hearing aids

Newpaper articlesHHP websites

Family members recommendationTV ads

Manufacturer brochuresInternet chat sites

Newspaper ads

0 10 20 30 40 50 60 70 80 90 100

% helpful/reliable

Average Age of New Users

66

68.4

67.8

66.3

68.8

64.5

65

65.5

66

66.5

67

67.5

68

68.5

69

Ave

rage

age

1989 1991 1994 1997 2000

New User Mean Household Income

$30,500$35,300

$30,800

$40,100

$46,300

$0$5,000

$10,000$15,000$20,000$25,000

$30,000$35,000$40,000$45,000$50,000

1989 1991 1994 1997 2000

U.S. Customer Satisfaction TrendsNo significant differences (H.A. <5 years.)

60.7 58.7 59.3 59.2

17.8 17.3 14.9 17.1

0

10

20

30

40

50

60

70

1991 1994 1997 2000

% S

atis

fact

ion

PositiveNegative

U.S. Customer Satisfaction TrendsNew Hearing Aids (< 1 year)

66 71 63 62.9

12 7 10 14.70

10

20

30

40

50

60

70

80

1991 1994 1997 2000

% S

atis

fact

ion

PositiveNegative

Hearing Aids “In the Drawer”

13.512

17.916.2

11.7

0

2

4

6

8

10

12

14

16

18

% H

eari

ng a

ids

in d

raw

er

1984 1991 1994 1997 2000

Hearing Aid Improvements Sought by Current Hearing Aid Owners (n=2,428)

(Highly desirable scores =4-5 on 5 point scale)

9588

858483828281817977

7473

Speech in noiseBetter sound quality

Less whistle/buzzingLower price

More soft soundsLonger lasting batteries

Work better on telephoneLoud sounds less painful

Speech in quietBetter fit & comfort

Should have VCLonger money back guarantee

Less costly to repair

0 10 20 30 40 50 60 70 80 90 100

% highly desirable

Hearing Aid Improvements Sought by Current Hearing Aid Owners (n=2,428)

(Desirable scores =4-5 on 5 point scale)

7271

666362

5652

483432

2821

15

Easier to regulate volumeMask tinnitus

Easier to cleanWork better on cell phone

Better sound to musicShould not break down as much

Less visibilityEasier battery change2-5 year payment plan

Should have remoteMore fashionable

ColorLease hearing aid

0 10 20 30 40 50 60 70 80 90 100

% highly desirable

Non-owner Demography“The Opportunity”

The Non-Owner OpportunitiesSelf-admitted Hearing Loss

Gender (Millions)

13.4

8.9

Male Female

The Non-Owner Opportunities by Age Classification

<185%

45-5426%

35-4416%

18-3410%

85+1%

75-849%

55-6418%

65-7415%

The Non-Owner Opportunities by Household Income

<$108%

$30-$3912%

$20-$2915%

$10-$1916%

$60+30%

$40-$4910%

$50-$599%

The Non-Owner Opportunities by Level of Education

Some Elem.2%

High School28%

HS-some28%

Elementary7%

Post-graduate10%

College-some9%

College16%

The Non-Owner Opportunities by Employment Status

Full time49%

Retired29%

Part time10% Unemployed

12%

The Non-Owner Opportunities by Metro-size

<50,00026%

2 Million +38%

50k-499k16%

500k-1.99 mil.20%

The Hearing-Impaired Market by State:Self-admitted Hearing Loss

• Top 10 states

– California

– Texas

– New York

– Florida

– Pennsylvania

– Illinois

– Ohio

– Michigan

– Georgia

– North Carolina

Conclusions• Hearing-impaired population > to 28.6 million.• Major increases in “Baby Boomer” and 75+ age

brackets.• Penetration increased to 22.2%:

– Free and direct mail impact

• Physician screenings declined to 14%.• Overall customer satisfaction unchanged.

– New hearing aid satisfaction on decline

• Hearing aids in the drawer improved to 11.7%.• Audiologist influence in dispensing continues to grow.

Conclusions

• New user rate has dropped to 31.6%.– Average age increase to 69– Household income increase to $46.3k

• Binaural rate is at an all time high of 84.5% for bilateral loss consumers.

• Third-party payments continue to increase.• “Out-of-pocket” retail price to consumer increased

67% since 1994.• “Baby-boomer” age wave continues to grow with no

indication that industry has tapped this segment.

Conclusions

• The top hearing aid improvements sought by current hearing aid owners:– Hearing in noise– Better sound quality– Less whistling & feedback– Lower price– More soft sounds

• Least important improvements:– Leasing a hearing aid– Color of hearing aid– More fashionable hearing aids

Conclusions• Top factors in choosing dispenser:

– Professionalism– Convenient location– Convenient hours– Price

• Top factors considered to be helpful and reliable when choosing a hearing aid brand:– Medical doctor recommendation– AARP recommendation– Manufacturer website– Hearing instrument specialist recommendation

Key Findings from Knowles Market Development Studies

The Decision To Purchase a Hearing Aid is Very Complex and Little Understood

Internal stigmaInfluential others

Physicianattitudes

Productperceptions

Attitudestowards HA

Specific impactors

General moderators

Physicalimpairment

Stages of denial

Perceived loss ofcommunicationperformance & need

Attitude towardGetting hearingsolutions

Behavior intent/HA purchase

Predisposition

PriceCommunication situations

Perceived age

Alternativesolutions

Socialcomparisons

Socioeconomicstatus

PersonalitySocialnetwork

HealthLifestyle &activity level

Psychologicalhealth

External stigma

Change & emo-tional reaction

The Relationship Between Ad Expenditures & Hearing Aid Sales is Weak

Estimate (regression) that $25 million = 6% growth

1 31 6

1 30 8

1 47 3 1 5

1 4 1 61 7 1 6

7 2

1 55 5

1 46 3

1 58 0 1 6

6 2

1 1. 1 1 3

. 4

9 1 1. 6

2 1

3 7. 6

9 .8

2 3. 7

1 4

2 3. 9

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Calendar year

1000

1100

1200

1300

1400

1500

1600

1700

Hea

rin

g a

i d s

a le s

0

10

20

30

40

Ad expense ($M

il)

Hearing aids

Ad Expense ($Mil)

The Issue of Price & Value

Customer Satisfaction with “Value” = Price/performance

Hearing aids 1-5 years of age

5349

54 54

2117 16 17

0

10

20

30

40

50

60

1991 1994 1997 2000

Per

cen

t

Satisfied

Dissatisfied

Satisfaction Highly Related to How Much $$ the Consumer Pays to Solve Their Problem

40

50

60

70

80

90

100

5 25 45 65 85 105 200+

$ Spent for 1% Handicap Reduction

Per

cent

Sat

isfa

ctio

n

Note: Handicap reduction measured by APHAB

Hearing Aid Prices are Inelastic at Higher Prices & Highly Elastic at Low Prices

-20

0

20

40

60

80

100

Mar

ket

Gro

wth

(%

)

100

200

300

400

500

600

700

800

900

1000

1100

Lowest Available HA Price

Starter Hearing Aid Market

Stigma & Price Are Not the Only Barriers to Market Growth

Increasing Invisible CIC Price ($)05

1015202530354045505560

5 ye

ar p

urch

a se

i nt e

n t (

%)

H.I. Owners

Nonowners

Only 35% of non-owners would take a "free" invisible hearing instrument.

The Issue of Stigma

Invisible Hearing Aids Have Greater Consumer Acceptance

Cosmetics/stigma

Attractive

Not embarrassing

Old age image

Visible

Product features

Reliable

Comfortable

Nuisance

Sound quality

Natural sound

Safe

High-tech0 20 40 60 80 100

% positive image

BTE

Empty ear


Economics

Affordable

Worth expense

Expense to maintain

Utility & value

Benefit

Value

Noisy situations

Quiet situations

Large group situations0 10 20 30 40 50 60 70

% positive image

BTE

Empty ear


3 3.5 4 4.5 5 5.5 6

Cosmetics & comfort (Means)

4.25

4.35

4.45

4.55

4.65

4.75

4.85

4.95

Pe

rfo

rma

nc

e &

va

l ue

(M

ea

ns

)

Can Positive Role Models Help Consumers Overcome Stigma?

• Only Two examples I am aware of in our industry:– President Reagan – 1983 (associated with 20% growth)

– Eddie Albert in Beltone commercials – 1989

• Apparent Clinton effect in Fall of 1997– Probable impact on admission of hearing loss by male

“baby-boomers”

– No impact on sales to date

What is The Viable Market for Hearing Aids?

Market Penetration is Highly Related to Recognition of Hearing Loss Handicap

0102030405060708090

1-4 5-9 10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

APHAB Unaided Score

Per

cent

Pen

etra

tion

Discriminant Function Probability of Non-owner Resembling Current HA Owner Based on

Multiple Subjective Hearing Loss Measures.

0

5

10

15

20

25

30

35

40

1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99

Discriminant Function Probability

Per

cen

t of

Mar

ket

Non-ownersHA owners

Probabilities 1-39% =

71% of non-owner market

14% of the owner market.

Four Methods of Measuring Viable US Hearing Aid Market

• Based totally on hearing loss measures the additional possible market growth is: Gallaudet Scores (est. dB Loss Better ear) = 125% Hearing Handicap Inventory (HHIE) = 154% APHAB = 127% Discriminant Function Modeling = 102%

• Clear that the current market could easily double based totally on hearing handicap.

• And, even more based on situational need.

Why Buy Hearing Aids?

Attitudes Per Se are Important, But Relationship to Hearing Aid Purchase Intent

is Perhaps More Important• Sample of 2,753 non-owners• Measured their attitudes on 76 issues.• Measured their hearing aid purchase intent in the next

five years.• Categorized them as a high or low purchase intenders.• Took ratio of high/low purchase intenders for each

attitude item.• Ranked ratios• First – present their attitudes in key categories.

– On following charts – view red (negative) as “barrier” to growth.

Hearing-Impaired Non-owner Attitudes Towards Hearing Aids

Factor = Distribution

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Trust doctors

Exposure to HA ads

Trust HA dealers

HA sellers are customer welfare oriented

HA sellers take advantage of you

Truth in advertising

30 day trial available

Trust audiologists

Percent of hearing-impaired non-owners

NegativeNeutralPositive


Factor = Hearing Health Professional Influence

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Dispenser

Audiologist

Family doctor

ENT




Factor =Hearing Loss

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Loss too mild

HA for unilateral loss

Loss severe enough

HA help nerve deafness

HA help tinnitus

Need surgery

Hear well most situations

HA help high frequency loss




Factor =Knowledge Level

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Some HA automatic

Know where to go for testing

Aware of invisible aids

Knowledgeable about HA

Audiologist vs HIS

Where to get hearing aids




Factor =Lifestyle

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Loss disruptive tolife

Would like to hearsoft sounds

Can afford HA

More seriouspriorities




Factor =Hearing Aid Performance

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Use on telephone

Perform as promised

Use in large crowds

Work in multiple listening situations

Tried HA - don't work

They work well

Eliminate background noise

Effective in most situations

Background noise

Stop hearing loss decline

Make only certain sounds louder

Use in noisy situations




Factor =Hearing Aid Characteristics

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Battery change

Physical fit

Seldom breakdown

Warranty reasonable

Natural sounding

Ease in handling

Differences in brand

Comfort

Hassle

Whistling & feedback

Needs constant adjustments

Durability of HA

Percent of hearing-impaired non-ownersNegativeNeutralPositive


Factor =Social Influence

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Children

Hearing aid owner

Friends

Spouse




Factor =Stigma & Cosmetics

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Old age image

Make you look mentally slow

People make fun of you

Difficult to admit loss

Embarrassed to wear

Noticeable

Too proud to wear HA

Make you look disabled

Make you look weak/feeble

Treated differently when HA worn


Negative

NeutralPositive

Hearing-Impaired Non-owner Attitudes Towards Hearing AidsFactor =Value of Hearing Aids

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Too expensive

Worth what you pay

Use less expensive device

Worth the expense

Restore hearing to normal

Maintenance expense

Good value

Perceived benefit



Top 12 Correlates of Hearing Aid Purchase Intent

0 100 200 300 400 500 600

Hearing well in most situations

Loss disruptive to life

Spouse's recommendation

Friend's recommendation

Audiologist recommendation

Dispenser recommendation

Child's recommendation

HA durability

Perceived benefit

Family doctor recommendation

Loss severe enough

ENT Recommendation

Purchase Intent Ratio (H/L)

Lowest Correlates of Hearing Aid Purchase Intent

• Brand• HA make only certain

sounds louder• Too expensive• HA sellers take advantage

of you• Can afford hearing aids• Need surgery• Know where to go for

hearing tests

• Know where to buy hearing aids

• Old image of hearing aids

• Use lower expense product

• Customer orientation of dispensers

• HA warranty

• Knowledge of hearing aids

Optimizing Quality of Life Benefits for the Consumer of

Hearing Aids

Summary of Quality of Life Benefits Associated with Hearing Aids

(NCOA Study – January 2000 Hearing Review)

• >Interpersonal relationships

• <Hearing loss compensation

• <Anger & frustration• <Depression• >Earning power• >Emotional stability• <Introversion• >Control of life

• <Self-criticism• <Paranoia• >Overall health• >Cognitive

functioning• <Discrimination• <Anxiety• <Social phobias• >Social activity

Leveraging the Quality of Life Findings

• Best way to leverage is to assure that your clients have achieved significant benefit with their hearing aids.

• Post-fitting benefit measurement and customer opinion surveys critical.

• Minimize hearing aids in the drawer.

• Use technology and processes which enhance customer satisfaction.

907,120 Customers do not Use Their Hearing Instruments (1997)

0

20

40

60

80

100

120

Volume (000)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Age of hearing aid (years)

325,000 1-4 years

Impact of Dissatisfied Customers

• Deming proved that a dissatisfied customer tells 16 other people but a satisfied person only 8 others.

• Negative word-of-mouth has blocked close to 4 million from purchasing our product.

• Potential $19 billion loss to dispensers.

11.1

7.1

6.8

6.4

5

4.8

4.3

3.9

3.9

3.4

3.1

Question value

Background noise

Performance in noisy situation

Whistling & feedback

Do not perform as promised

Do not work well

Limited situations can be used

Negative feedback HA owner

Sound quality

Reliability (break down)

Can't use on telephone

0 2 4 6 8 10 12

Nonusers with hearing loss (millions)

Some key reasons why people do not buy HA

Customer Satisfaction Translates into Consumer Behavior

0102030405060708090

100

Per

cen

t of

HA

Ow

ner

s

Verydissatisfied

Dissatisfied Neutral Satisfied VerySatisfied

Level of Satisfaction

Repurchase HARecommend dispenser

Reasons for Non-Use

• #1. Poor benefit (30%) - 268,507“When ______sold me the H.A., I was

confident it would help me hear better. When I received it and wore it every day, it did not make my hearing any better. So, I don’t wear the HA and feel like I wasted my money. I tried to return it and the person did not seem to want to help me. I am quite dissatisfied with the whole experience.”

Reasons for Non-Use• #2. Background noise (25%) - 229,383

I don’t wear my H.A. because I need it at a dance, restaurants, and large groups. All the H.A. does is increase all sound including background sounds. No help.”

Reasons for Non-Use

• #3. Fit & Comfort (19%) - 169,431“It’s hard to keep it in my ear. I travel for

business a lot and can’t risk it falling out of my ear.”

Reasons for Non-Use• #4. Negative side effects (11%) - 99,048

“Ears that hurt, too much pressure in the ears, blisters in ears, rashes in ears, itching ears, dizzy, nervous, ears that sweat, builds up wax in inner ear, headache, hair gets caught in hearing aid, infections in ear, problems chewing or swallowing, plugs up ears”.

Reasons for Non-Use

• #5. Price & cost (10%) - 93,839“My H.A. was never dependable. Taking it in for an adjustment was only a headache as it never performed very long. Had to be looked at again. The last time I

had trouble, the office wanted to send it to _____ at $200 & just to check it, plus another $200 to repair it.”

We must minimize hearing aids in the drawer

• 907k inactive hearing aid owners• Key reasons:

– Poor benefit– Background noise– Fit and comfort– Negative side effects– Maintenance Cost/broken HA

• Impossible for consumer to experience QOL changes if their hearing aid is in drawer.

• Dispenser must find ways of optimizing the consumer’s experience

Dispenser does have control over hearing aids in the drawer

• # 1. Poor benefit:Use programmable technology (analog or DSP)Pre-post benefit measurementReal ear measurement90 day post fitting customer satisfaction survey.100% money back guaranteeAural rehabilitation

• Significant impact on hearing aid satisfaction.

• Return rates been shown to be cut in half.


• # 2. Hearing in noise100% use of dual microphones – not just in high-end

productDSP for comfort in noiseVolume control necessary for some segmentsManual omni/directional switch necessary for some

consumersBinaural fitting for bilateral loss customers (85% rate in

US- much lower in Europe)Deep-fitting CICs give some benefit.Aural rehabilitation


• #3. Fit and ComfortExtreme vigilance during impression taking.

• Multiple shell impressions if necessary with “best” going to the manufacturer.

• Silicon material considered superior.Explore emerging soft shell technology for difficult

cases.Rework within office.Assess manual dexterity and visual acuity considerations

relative to hearing aid style.14 or 30 day trial post-fitting subjective measure of fit

and comfort.

Improving Customer Satisfactionwith Hearing Aids

Recent Research

Strategic Objective of Knowles• Participate with the industry in a continued dialogue

on factors impacting customer satisfaction.• Customer satisfaction improvement

– critical to growth of the market– the only way to properly leverage QOL findings.

• Knowles conducted research on 25,000+ consumers.– Customer satisfaction– Subjective benefit

• Publication of journal dedicated to customer satisfaction: High Performance Hearing Solutions.

Previous MarkeTrak Customer Satisfaction Research

• Advanced technology enhances customer satisfaction:– Programmable (digital or manual)– Multiple memories– Multiple channels– Multiple microphones – directional hearing

instruments (strongest factor)– Non-linear signal processing (e.g. WDRC)

Previous MarkeTrak Customer Satisfaction Research

• Other important factors– Volume control (some segments)– Telecoils– Completely in the canal instruments (CIC)– Binaural hearing aids

• More recent research– Cerumen management systems (Sep. 2001 HR; Apr. 2002 HR)– Digital Hearing Aids (Nov. 2000 HR)

Now 40% of the marketSmaller clinical studies generally positive

Recent Research with MicroWaxbuster Demonstrates it Will Dramatically Reduce Hearing Aid Service Rates

MicroWaxbuster Cutaway CIC with MicroWaxbuster installed

In analyzing 7,000,000 small receivers Knowles has discovered that receiver replacements are 8 times less likely if the manufacturer was a heavy user of the Waxbuster or MicroWaxbuster than if they used none.

10088

6660

48

1813

0102030405060708090

100

None 1-9% 10-19% 20-29% 30-49% 50-69% 70%+

Waxbuster/MicroWaxbuster Usage

Rec

eive

r R

epla

cem

ent I

ndex

Study # 2 – 90,000+ Consumers

• Database query of one US manufacturer.• 24 month study across three styles of

hearing instruments: CIC, ITC, ITE.• Consumers segmented:

– Age of instrument – 1-24 months– MicroWaxbuster usage or None.

• Tracked receiver replacements in corporate service files.

Receiver replacement rates per 100 CIC hearing aids (n=21,345)

0

5

10

15

20

25

30

35

40

45

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Age of Hearing Aid (Months)

Rec

eive

r R

epla

cem

ent R

ate

MicroWaxbuster

No Wax Guard

Poly. (No Wax Guard)

Poly. (MicroWaxbuster)

Receiver replacement rates per 100 ITC hearing aids (n=47,316)

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Age of Hearing Aid (Months)

Rec

eive

r R

epla

cem

ent R

ates

MicroWaxbuster

No Wax Guard



Receiver replacement rates per 100 ITE hearing aids (n=21,647)

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Age of Hearing Aid

Rec

eive

r R

epla

cem

ent R

ates

MicroWaxbuster

No Wax Guard



Percent reductions in receiver replacements by style of hearing aid due to the MicroWaxbuster across all months and

over two years (n=90,308).

4248

31

59

40

63

0

10

20

30

40

50

60

70

CIC ITC ITE

Hearing Aid Style

% R

educ

tion

All monthsTwo years

Conclusions

• Increased penetration of ITE, ITC, and CIC hearing instruments with the MicroWaxbuster® product will have a positive impact on the market place.

• Offer this as a strongly recommended option to your patients/customers.

• Both manufacturers and dispensers should recognize increased profits by selling this optional component while reducing within-warranty repairs.

• Consumers for a small additional fee, will experience:– Greater reliability in their product,– Resulting in fewer hearing instrument repairs,– Reduced frustration and therefore,– Increased consumer satisfaction.

Digital StudyNovember 2000 Hearing Review

• Multiple manufacturer products were studied.• Results of first large-scale study on satisfaction with

DSP hearing aids:– Single European based manufacturer– 200 single mic (44% ITE / 56% ITC)– 296 multiple mic (69% BTE / 31% ITE)– Compared to 418 MarkeTrak (analog) norms– Average age of instruments 7-8 months

• Consumer completed Knowles MarkeTrak survey– 45 ratings of hearing aid and dispenser

Top ten correlates of overall satisfaction (in rank order)

1. Perceived benefit2. Sound clarity3. Value (price/performance)4. Reliability5. Use in leisure activities6. Natural sounding7. Use in noisy situations8. Use in large groups9. Use in restaurants10. Use outdoors

Factors showing at least 10% improvement in customer satisfaction

17

17

16

16

16

15

14

14

14

13

12

12

12

10

3

11

7

4

6

10

5

10

-3

11

6

2

9

0

Overall satisfaction

Comfort with loud sounds

Use in Noisy situations

Sound clarity

Natural sounding

Will repurchase brand

Outdoor situations

Hours worn

Battery life

Whistling/feedback

Workplace

Quality of life

Recommend dispenser

On-going expense

Customer satisfaction variable

0 5 10 15 20-5

% difference in customer satisfaction ratings

Multiple Mic Digital

Single Mic Digital

Dual= 14

Omni=4

Significant Differences Overall, Consumer Behavior & Dispenser

Factor Single Mic

& MarkeTrak

Multiple Mic & MarkeTrak

Multiple mic & Single Mic

Overall satisfaction

Quality of life Recommend HA Recommend HHP Repurchase HA Wear hearing aid Dispenser service

Significant Differences Product Features

Factor Single Mic

& MarkeTrak



Fit/comfort

Ease VC adjust. Visibility Packaging

Freq. Cleaning

Warranty

Ease Battery Chg. On-going expense

Factor in yellow denotes top ten correlate of overall satisfaction.

Consumer Need for a Volume Control

Yes28%

No46%

Not sure26%

Yes35%

No40%

Not sure25%

Single Microphone Multiple Microphone

Customer Satisfaction is Related to Need for a VC

42

6057

7981

93

Single Multiple

Number of Microphones

0

20

40

60

80

100

% Overall satisfaction

Desire for Volume Control?Yes Not sure No

Significant DifferencesPerformance Factors

Factor Single Mic

& MarkeTrak



Benefit Reliability

Sound clarity Natural sounding Sound of voice Soft sounds

Loud sounds Whistling/feedback


Significant Differences Performance Factors (Cont.)

Factor Single Mic

& MarkeTrak



Value (price/perf.) Directionality

Use in Noisy Sit. Battery Life


Significant DifferencesListening Situations

Factor Single Mic

& MarkeTrak



One-on-one T.V.

Small Groups Listening to music

Place of worship

Outdoors Leisure activities


Significant Differences Listening Situations (Cont.)

Factor Single Mic

& MarkeTrak



Car

Restaurant Concert/movie Workplace Telephone

Large group


Summary of Key Findings

Single Mic DSP

Multiple Mic DSP

Overall customer satisfaction

improvement (vs. MarkeTrak)+3% +17%

Factors with 10%+ improvement

(vs. MarkeTrak)4 14

Top ten consumer factors improved

(vs. MarkeTrak)0 6

Net listening situations improved

(vs. MarkeTrak)-1 4

Net performance/value factors improved (vs. MarkeTrak)

-2 6

Significant differences

(single vs. multiple microphone DSP)1 14

Conclusions

• Performance in noise:– Key reason why hearing-impaired do not buy hearing aids

(MarkeTrak).

– #1 hearing aid improvement sought by hearing aid users (United States MarkeTrak study - 2001).

– #1 hearing aid improvement sought by hearing aid users (German study - 1995).

– #2 reason why 907,000 of our customers place their hearing aids in the drawer (MarkeTrak).

Conclusions

• Consumer studies now demonstrate the superiority of multiple microphone hearing aids over omni-directional only aids:– Kuk (Hearing Instruments, 1996) - analog– Kochkin (Hearing Review, 1996) - analog– Schuchman, Valente, Beck, Potts (HR, 1999) – analog

(double blinded study)– Kochkin (Hearing Review, 2000)- digital

• Consumer research supportive of dozens of small clinic/lab studies or theoretical papers.

Recommendations• Fit all qualified candidates with directional hearing aids

(BTE, Full concha, half shell).• Ask manufacturers to extend directional feature to lower

priced product (not just high end programmable.)• Completely automatic aids are tremendous feature for

some, but not all, consumers:– Make sure your patient can live without VC or directional/omni-

directional switch.– Lack of control could dramatically impact satisfaction.

• Consider active wax protection system as standard feature on all In-the-ear instruments.

Documents

MarkeTrak VI: Hearing Aid Industry Market Tracking Survey 1984-2000 Sergei Kochkin, Ph.D. Knowles Electronics, Inc. February 27, 2002