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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
% 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
Invisible Hearing Aids Have Greater Consumer Acceptance
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
Invisible Hearing Aids Have Greater Consumer Acceptance
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
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
Factor = Hearing Health Professional Influence
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Dispenser
Audiologist
Family doctor
ENT
Percent of hearing-impaired non-owners
NegativeNeutralPositive
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
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
Percent of hearing-impaired non-owners
NegativeNeutralPositive
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
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
Percent of hearing-impaired non-owners
NegativeNeutralPositive
Hearing-Impaired Non-owner Attitudes Towards 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
Percent of hearing-impaired non-owners
NegativeNeutralPositive
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
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
Percent of hearing-impaired non-owners
NegativeNeutralPositive
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
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
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
Factor =Social Influence
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Children
Hearing aid owner
Friends
Spouse
Percent of hearing-impaired non-owners
NegativeNeutralPositive
Hearing-Impaired Non-owner Attitudes Towards Hearing Aids
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
Percent of hearing-impaired non-owners
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
Percent of hearing-impaired non-owners
NegativeNeutralPositive
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
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