PSAPs and Mercedes Benz

I hope the words in the title caught your eye sufficiently to entice you to read what follows.  Many people are like that.  Psych/Marketing 101.

What might we learn from Mercedes Benz as the clinical world around us changes?  Or, more precisely, what’s the market for our services and what might influence future success?  (We do want to make PSAPs work, don’t we?).  Is there a lesson to be learned from a manufacturer of German automobiles?

Some caveats: 

  1. I am not an economist like other writers on this website. I took a couple of Econ classes in college and was thoroughly confused.  (“One handed economists…” and all that.)
  2. I don’t know much about the business of pricing, profits, or marketing in business. For that, I recommend Traynor & Glaser’s third edition book[1].  Any book with a third edition is likely worth reading.
  3. I am sure lots of people will disagree with me in this discussion. What can I say other than we all are entitled to our own opinions. When facts contradict those opinions, that’s a different matter. I have no facts.
  4. When I contacted MB about using their pricing strategies as examples in return for one of their cars, they did not answer. (I have nothing else to disclose.)

Have you ever driven or taken a ride in an S-Class Mercedes?  Sweet!  Starting at about 6 figures (all to the left of the decimal point), there is no mistaking the engineering and quality of these automobiles.  Now, consider how MB markets the S-Class.  How do they spend their marketing dollars?  What would it take to sell more S-Class cars?

In an interesting (and sort of parallel) look at the economics of the hearing aid industry, Amyn Amlani[2], discussed the past hearing aid market.  He presents evidence that indicates the “market penetration” of hearing aids is less than It has been, even though total unit sales have risen.  All this in the face of an increase in population that, by all estimates, has varying degrees of hearing loss.  If that is not at least a partial indictment of something…. well, draw your own conclusion.

Back to the German car issue, recall some years ago, when Mercedes wanted to increase their sales, they decided to concentrate on cars that would satisfy a specific portion of their intended market.  Perhaps they thought that no matter how much they spent on S-Class promotion, they could not sell that many more.  Price, it seems, was a significant factor. 

So, MB introduced different priced models that mirrored their premium car.  Enter the E-Class, the C-Class, the A-Class and all the rest of the models that were sort of like the S-Class, but not as refined and not as expensive.  They used their reputation and stature to “create” a market for their less expensive models. They probably lost some S-class sales, but also probably made up for this with sales of the lesser priced models.

There a parallel situation with hearing aids.  When the customer doesn’t need a really luxurious ride and heated seats, MB has a car that fits that bill.  When patients don’t need all the extras that come with the newest line of hearing instruments, many audiologists fit these patients with instruments that perform just as well but don’t have extra, unnecessary settings and cost.  The one glaring difference is that with cars, after the needs of basic transportation are met, the rest is optional and not necessary.  Not always so with hearing aids.

What did MB do when they wished to “help more people enjoy their luxury experience”?  One thing they didn’t do was to challenge or change their pricing on their flagship products.   They created a structure that accommodated different levels of their product—as determined by customer needs—and modified pricing accordingly.

Flipping back to hearing aids, perhaps these new devices could be best used by consumers who are aware not only of their basic auditory needs, but also have a good idea of what constitutes “an option”.  And, how do these people determine needs and options?  Our answer lies in the data an audiologist can generate.  One lesson from MB might be that data and professional opinion could be a big help to people who opt for something other than an S-class hearing device.  Consumers should ask for data and audiologists should deliver.

[1] Glaser, R.G. and Traynor, R.M., 2019, Strategic Practice Management: Business Considerations for Audiologists and Other Health Care Professionals, Third Edition, Plural Publishing, in press.  Second edition also available.

[2] Amlani, Amyn,  Improving Hearing Aid Market Penetration through Forward Integration , accessed at HearingHealthMatters.org on 2/1/2018.

 

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About Mike Metz

Mike Metz, PhD, has been a practicing audiologist for over 45 years, having taught in several university settings and, in partnership with Bob Sandlin, provided continuing education for audiology and dispensing in California. Mike owned and operated a private practice in Southern California for over 30 years. He has been professionally active in such areas as electric response testing, hearing conservation, hearing aid dispensing, and legal/ethical issues. He continues to practice in a limited manner in Irvine, California.

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