The World Wide Commoditization of Amplification

Over the past 10 years or so the landscape of audiology has changed significantly.  Of course, these landscape changes started in the US, arguably one of the largest and most lucrative markets for hearing aids d3worldwide. Other markets around the world have followed or are soon to follow the lead. In the past, patients would consult their audiologist for the type, style, and technology of hearing instruments, obtaining rehabilitative expertise for their use, purchase their amplification products, and return for follow up treatment.  Recently,  there has been a push, particularly on the part of hearing aid manufacturers and large retail centers,for commoditization of amplification products. 

What is Commoditization?

 

A commodity is defined as a good or service whose wide availability through a variety of outlets leads to smaller profit margins and diminishes the importance of factors, such as brand name, service, expertise, purchase place and other considerations while focusingcom on price.  In a flat hearing aid market worldwide, it seems that the method of choice for growing the number of hearing instruments used is through commoditization of these products.  The concept that “any hearing instrument is going to provide the same benefit as another so consumers should find the devices as cheap as possible”, seems to prevail.  So, the message is buy it online, on late night TV, from the radio, a magazine, COSTCO, Sam’s Club, and other international discount stores.  ba2In the US, audiology has made great strides to educate audiologists to the doctoral level, and in other countries audiologists and hearing aid dispensers have also substantially increased their formal education, training, apprenticeships and other background to provide a better rehabilitative experience for the hearing impaired patient.  The  worldwide increase in audiological expertise notwithstanding, it appears that hearing aid manufacturers, holding companies, and other profit seeking major corporations have now seen hearing and its rehabilitation as a lucrative business opportunity.

Plain and Simple…It is a Business Opportunity.

 In the minds of the business people, technology has taken over what used to be a rehabilitative process requiring audiological expertise.  With the correct computer software and the sophistication ofba1 amplification technology many manufacturers feel that these products virtually fit themselves for most patients.  It is a common phrase around the corridors of manufacturers’headquarters that “you do not need a doctorate to fit a hearing aid”.  Since they are business professionals with virtually no clinical background there is no capability to understand what it takes to live and interact on a daily basis with patients ba4who are being fit with their products.   Thus, by not living with their fittings, they do not see the need for the educational background that has been getting better worldwide in hearing rehabilitation.  They see only ‘the sale’ as success, not the use of their product, as do most audiologists. Since they do not see the result of the rehabilitative process, they miss the substantial psychological and often medical implications of hearing loss.  In the minds of holding company business executives, 

Bisgaard, 2013
Bisgaard, 2013

it’s only the sale of the product that matters. 

These concepts are fueled by market penetration facts that have plagued the industry for quite some time.  The facts are that in even in countries with the best market penetration (where those that need hearing aids actually purchase them) it is only about 20%. Bisgaard (2013) presents that the worldwide market penetration is extremely low, rocket fuel for hungry holding companies and hearing aid manufacturers to fund sales operations that are not necessarily rehabilitative facilities.  Smart business people flock to products and markets where there is potential. With the current market penetration ba5and the incidence of hearing loss among those that are 60 -74 (roughly 30%) nd among those 75+ the incidence is over 50%.  Simple mathematics calculate a huge projected market over the next 35-40 years factoring in the aging of the worlds population. Additionally most of the hearing impairment that is seen world wide is much easier to treat with today’s amplification products that in years past, suggesting to these corporate executives that technology and minimal expertise can fit a majority of the products sold leaving out the rehabilitative process.

While there will always be a place for some independent audiologists or hearing aid dispenser to facilitate the aural rehabilitation process, the “big box stores” and wholly owned “corporate stores” allow the manufacturers to sell direct to the end user of their products in direct competition with their long term customers, the audiologists, dispensers and international distributors. While in the US and some other countries, ba6the Big Box stores have taken a large share of the market, Bernstein (2013) reported the rapid growth of manufacturer-owned retail stores.  In 2013, Sonova owned more than 2000 retail outlets, about four times as many as in 2003, that is the addition of about 150 stores per year.  William Demant had a little over 1200 stores in 2013, triple its number in 2003, that’s about 80 stores per year. GN ReSound’s holdings of somewhat over 1500 stores are up about 35% from a decade ago, adding about 50 stores per year.

Where does this trend leave us?

As clinics specializing in the rehabilitative treatment of patients with hearing ba7impairment, we will need to be creative using all our ingenuity to survive in these highly competitive markets. This will require excellence in customer service, expertise in hearing and its rehabilitation as well as the use of sound business techniques.

These changes are not simply in one of the world markets such as the US or Europe – it is a global change focusing on sales and not necessarily on benefit and use of the products.  If your market has not changed in your part of the world, brace yourself: the changes are on the way!

References:

Bisgaard, N. (2013).  Current approaches to hearing healthcare delivery: International perspective.  GN Resound. Retrieved March 8, 2016.

Gupta, V. (2013). Global hearing aid market report : 2013 Edition.  Koncept Analyitics.  Retrieved March 8, 2016.

Kirkwood, D., (2013).  Research firm analyzes market share, retail activity, and prospects of major hearing aid manufacturers.  Hearing Health and Technology Matters.  Retrieved March 7, 2016.

Staab, W. (2014).  Hearing Aid Market Penetration.  Hearing Health and Technology Matters.  Retrieved March 8, 2016.

Images:

Artica (2016).  Retail Design Blog.  Retrieved March 8, 2016.

Bisgaard, N. (2013).  Current approaches to hearing healthcare delivery: International perspective.  GN Resound. Retrieved March 8, 2016.

Majors, L. (2014).  The Bionic Hearing aid. Hearing Assist LLC.  Retrieved March 8, 2016.

Signal (2016). Wave Issue 8, Summer 2015: Leave no one behind.  Retrieved March 8, 2016.

Steinkirchner, S. (2012). 5 ways to improve your customer service. Forbes.  Retrieved March 8, 2016.

 

 

 

 

 

 

About Robert Traynor

Robert M. Traynor, Ed.D., MBA is the CEO and practicing audiologist at Audiology Associates, Inc., in Greeley, Colorado with particular emphasis in amplification and operative monitoring, offering all general audiological services to patients of all ages. Dr. Traynor holds degrees from the University of Northern Colorado (BA, 1972, MA 1973, Ed.D., 1975), the University of Phoenix (MBA, 2006) as well as Post Doctoral Study at Northwestern University (1984). He taught Audiology at the University of Northern Colorado (1973-1982), University of Arkansas for Medical Sciences (1976-77) and Colorado State University (1982-1993). Dr. Traynor is a retired Lt. Colonel from the US Army Reserve Medical Service Corps and currently serves as an Adjunct Professor of Audiology at the University of Florida, the University of Colorado, and the University of Northern Colorado. For 17 years he was Senior International Audiology Consultant to a major hearing instrument manufacturer traveling all over the world providing academic audiological and product orientation for distributors and staff. A clinician and practice manager for over 35 years, Dr. Traynor has lectured on most aspects of the field of Audiology in over 40 countries. Dr. Traynor is the current President of the Colorado Academy of Audiology and co-author of Strategic Practice Management a text used in most universities to train audiologists in practice management, now being updated to a 2nd edition.