Costco & Phonak: Much Ado About Nothing?

Hearing Health & Technology Matters
April 16, 2014

Editor’s Note: We know the story is getting old and it’s gone through a lot of emotional hills and valleys. We’re signing off on it today by revisiting the balanced viewpoint and perspective brought to us last month by Terry Ross at Hearing Economics. He helps bring us back from the brink and put things into a broader perspective gained from his many years in the hearing industry.

In a World Where Audiologists’ Hearts Are Breaking, One Man Puts His Finger on the Pulse


H. Terrence (Terry) Ross, Vice President, MedRx Inc.

Once again, I read with amusement, the fear and loathing that is exhibited by our industry when a publicly held company announces a strategic decision to grow its business either through acquisition of corporate-owned retail clinics, initiating new distribution channels, or establishing strategic partnerships with other business entities.

The reality is that every one of the top five companies has such supply relationships and they will continue to explore these opportunities in the future.  In an industry that remains under-served, corporations must secure new channels of distribution or tap new age groups to grow their core business.  They surely have fiduciary duties to their shareholders to maximize their investments, and owe it to their employees and customers to re-invest in research, so that we gain access to new and more powerful solutions.  Why does it seem we are always surprised when such events happen like the recent Costco/Phonak agreement?

Our industry, even today as the average age of the population continues to increase, still grows at an embarrassingly slow annual rate.  Companies need fuel to research develop new products – that means they have to grow organically.

Companies  simply cannot thrive  by constantly trading customers back and forth, as has been the unfortunate model that our industry has had to live with for much of its existence.

Competition: It’s a Good Thing

History has shown that new competition often helps expand local businesses that have similar products and services.  Why, you may ask?

First, public awareness is heightened – more people are exposed to the great technologies our industry has to offer.

Secondly, in the case of Costco, a younger, more tech-savvy customer is entering the market. This is great news for all private practice businesses, as it offers new opportunities to reach consumers in the future at a younger age.  Often as people age, they select a more intimate and personal environment to seek healthcare solutions.

Third, in general, private practitioners tend to focus more on the total patient journey, on-going consultation and rehabilitation, which leads to a more personal relationship than typically happens in a big-box store environment.  Simply put:  Different professional environments produce different consumer expectations.

At the end of the day, there will always price-driven consumers – they exist with or without Costco in virtually every market.   The fact is, Costco has been in the hearing care business for some two decades – so that competition has been evident for many years.

Reports of the Death of Audiology are Greatly Exaggerated

Why all the fuss now?   Costco won’t affect you, other than in a positive way, so long as you:

  • Have a solid business plan and customer base
  • Remain focused on what has brought you success in the past
  • Keep to the business practices that have worked for you

Private practice isn’t dead, dear colleagues, it is simply facing new challenges. Those who are prepared to embrace the reality of more competition and have confidence in their abilities will continue to thrive.

*feature photo courtesy hallowpalooza invasion of the body snatchers


Terry Ross is Vice President of MedRx, Inc., a global manufacturer of PC-based audiometric diagnostic and testing instrumentation and subsidiary of William Demant Holding Group. He has over 35 years of  executive management experience within the hearing care industry.  He is responsible for directing the global sales and marketing activities for MedRx Inc., and is responsible for the global distribution of the full line of MedRx brand audiometric technologies.

 Mr. Ross has spent the last three decades in a variety of executive management positions in sales, training and marketing of hearing care-related products, equipment and services. He received his B.S. degree from Mankato State University, Minnesota, USA and is a certified sales trainer from Wilson Learning® Center – an international professional sales training and executive development organization.

  1. Of course he would say this, he is a Vice President at one of the companies selling their products through Costco, William Demant / Oticon

  2. As a long time hearing aid user, various manufacturers over the years, I am getting frustrated with hearing loss being treated as if is not related to health care but rather an inevitable inconvenience of getting old. Now Mr Ross (among others) is trivializing this medical issue by leading us to believe that the remedy is for us to drive over to Costco or a Walmart, or heck why not even a Seven-Eleven, to buy a hearing aid. Stuff that puppy into your ear and your will back to normal right? Not right. Not even close. It is misleading to even hint that this is the reality of wearing a hearing aid.

    This strategy of “price point only” takes advantage of those who are first time hearing aid buyers who have not taken the time to educate themselves about the complexity of hearing and hearing loss and who probably haven’t seen their primary care physician to make sure their hearing loss isn’t due to something as minor as compressed ear wax to something as serious as a minor stroke.

    Once again it will be the consumer who ultimately looses. If Phonak really cares about their customers why is it only dropping the price for Costco and not doing so for all hearing health professionals? And why this particular model of hearing aid? No particular hearing aid will be best for every person it depends on the type and severity of the hearing loss. The temptation will be great for the naive consumer to buy Phonak’s low price point hearing aid regardless of whether it is the best for their particular hearing loss. In the end the “cheap” hearing aid will end up in a drawer because it hasn’t met the customers needs. An unused hearing aid is no bargain. But it is to Phonak and Costco if they can sell a boatload of them.

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