Hearing Aid Distribution Thoughts

The Future – Marketing FactorsFuture

The previous multi-part series on Wayne’s World looked at past and existing hearing aid distribution systems.  This presentation is intended to look forward into hearing aid distribution in the future, but not with specific directions or suggestions.  Instead, it is more of a “yellow light, ” cautioning that there are marketing factors that should be recognized.

Long before audiologists dispensed hearing aids, they raised questions about the future role of the traditional hearing aid dealer based on events at the time.

“The hearing aid dealer currently faces dynamic changes – wrought by public demand (emphasis added) – in the health-care delivery systems.  These changes stand to threaten the dealer’s very existence.  Some people doubt that dealers’ philosophies of client care are sufficiently flexible to ‘roll with the punches’ of the ever-extending arm of government” {{1}}[[1]] Hattler, K.W. The survival of hearing aid dealers in futuristic delivery systems, Hearing Aid Journal, February, 1974, pp. 14,30[[1]].

What if the word “dispenser” is substituted for “dealer” in the above paragraph, and then use that term to relate to both the current traditional dealer and the dispensing audiologist?  And, if we changed the last few words to say “…of the ever-changing mind of the hearing-impaired consumer?”

Goose or Gander – Which is it?

Over the years, I have often heard hearing aid industry personnel comment that marketing and selling hearing aids is not like selling other products – that selling hearing aids is “unique,” and as such, it can’t be compared with other businesses.

Then, when speaking with marketers outside of the hearing aid industry, they tell me that this is what every industry says, but that there are certain basics pertaining to consumer products, which the hearing aid is, that cannot be ignored.  They state that marketing factors are most likely to determine the direction of hearing aid distribution (including costs, etc.), and not the definition of an audiologist/dispenser, or their educational experiences.

Marketers remind us that any market continuously changes, and much of the marketing direction depends on the interpretation of the item as viewed by the consumer, and not by the seller.  They point to hearing aid or PSAP (personal sound amplification products) perception and sales as evidence of this.  And, to understand this, we should constantly be mindfulof the basic difference between marketing and selling: marketing is looking out for the consumers’ needs, whereas selling is looking after the sellers’ needs.  And, if the perception of the hearing aid changes, what impact does this have on the way that the consumer’s needs must be met?  What does this mean for the distribution system?

The question is, how is this perception defined?   This is important because the consumer’s perception of a product has a significant effect on the distribution system and the skill levels and expected use of those skills by the person selling the product.  Of interest is that this very topic was something I wrote about for the Academy of Dispensing Audiologists in 1990, so it is not new, but shows how the wheels of change can move slowly in this discipline {{2}}[[2]] Staab, W.J., Marketing hearing aids – an overview, Directions in Marketing Audiology, Turning up the Volume, the ADA Marketing Handbook, 1990, pp 1-9[[2]].

Perception of the Hearing Aid as a Product

A client’s perception of a hearing aid, like other products, can have an expected purpose, or that which can change over time.  In the final analysis, the client’s perception of the product is usually the direct result of the nature of the client’s preference, or need, for the product.  Assuming the hearing aid to be a consumer product, these perceptions can usually be placed into five classifications stages (other sources may utilize slightly different names, and may include additional stages, but the concept is the same):

1.  New product

2.  Unsought good

3.  Specialty product

4.  Shopping good

5.  Convenience good

Not all consumer products follow the progression through all these stages, but it is important to understand how the hearing aid fits into this scheme.  The consumer’s perception of the good also tends to determine the distribution system and subsequent cost of the item, as well as the marketing approach to use.  It is believed that the seller cannot force the consumer into a category, but that the perception where the product falls is determined by the consumer.

Product Perception Stage Expectations

As to the stages of perception mentioned above, one might expect (diagrammed in Figure 1):

  1. A new product is expensive, requires personal selling, is directly purchased from the manufacturer, and has extremely limited distribution.  The hearing aid is past this stage, even with technology innovations.
  2. Unsought goods are expensive, require one-on-one selling, require personal selling, and have very limited distribution.  Hearing aids have certainly experienced this perception stage.
  3. Specialty goods have unique characteristics and brand identifications.  They continue to be expensive, and are provided in specialty stores (retail hearing aid offices), factory-owned or franchised stores that have made arrangements to carry that particular product.  The products are purchased by these stores directly from the manufacturer.  Hearing aids have been sold under these conditions for some time.  The aid may sometimes be viewed by the client as a technology product rather than a consumer product.  But, with technology items, consumer purchasing risk is higher.  Under these circumstances, intangible factors become important.  Potential hearing aid wearers evaluate dispensers on how well they will perform and on how much they can be trusted.  Even though the client may be impressed with the technical or educational skills, the typical client is not is a position to judge the quality of the skills themselves.  The client can, however, judge the dispenser’s attentiveness, attitude, helpfulness, and the value of clear communication about his/her problems.
  4. A shopping good is one in which the consumer does not have a predetermined product in mind.  The consumer is likely to undertake a search to select the store to patronize.  Shopping goods carry a somewhat lower price, are purchased from discount stores, shopping centers (malls), and shopping strip malls.  The products are purchased by these outlets from wholesalers, or directly from the manufacturer.  This type of activity is currently in place and is resulting in conflicts between those in Stage 3.
  5. With convenience goods, the most accessible brand will be purchased.  For example, if the customer utilizes an outlet because it is the most accessible, it would be considered, for that customer at least, a convenience store, making the product to some extent, a convenience good.  Convenience goods carry a low price.  These products can be found in drug stores, vending machines, discount stores, etc., and are purchased also from wholesalers or directly from manufacturers.

In each of these steps, the consumer perceives the product differently, and the price is lowered accordingly.  Figure 1 diagrams the product perception and resulting distribution system.

Figure 1.  Summary of types of consumer perceptions of a product, the distribution system, the extent of distribution coverage, and the general cost of the item.
Figure 1. Summary of types of consumer perceptions of a product, the distribution system, the extent of distribution coverage, and the general cost of the item.

 

From a perceptual point of view (both client and dispenser), the hearing aid has historically been identified as an unsought good, and many dispensers continue to sell hearing aids based on this premise.  The client may not feel he/she presently needs or wants hearing aids, and therefore does not actively search for the product.  The benefit of the product may not be immediately obvious and therefore, requires personal explanation and/or demonstration.  Sales techniques associated with selling an unsought good are essentially the same as those required in selling a new product; one-on-one interaction between the client and the seller, whether it be in the office or in the home.  This form of selling interaction is costly, both for the client and seller.  Recognition of these facts is important to the eventual approach to the market.  It seems obvious that for the hearing aid to capture more than approximately 20% of the market penetration that currently exists, the product should be perceived as something other than an unsought good.

But, keep in mind that the closer the hearing aid comes to becoming a convenience item, suggesting that market penetration will be improved (something that I have heard audiologists and dispensers wish for so that more sales will result), the lower the price becomes and the more extensive are the distribution systems.  And, convenience items are sold on very low margins.  One might want to be careful what one wishes for.

About Wayne Staab

Dr. Wayne Staab is an internationally recognized authority on hearing aids. As President of Dr. Wayne J. Staab and Associates, he is engaged in consulting, research, development, manufacturing, education, and marketing projects related to hearing. Interests away from business include fishing, hunting, hiking, mountain biking, golf, travel, tennis, softball, lecturing, sporting clays, 4-wheeling, archery, swimming, guitar, computers, and photography. Among other pursuits.

1 Comment

  1. When I started working in the industry as an audiologist with a hearing aid manufacturer in the early 1970s, the Marketing Vice President of the company (Dahlberg), sat me down and explained the lay of the land. Dahlberg was a tightly controlled franchise organization then, and the owners of the franchises were strongly encouraged to develop “manpower” organizations. That is, the method of distribution relied on hiring and training a goodly number of sales people who followed leads and attempted to sell the hearing aids in one on one conversations in the home. This method of selling he called “specialty” selling, and he said the same techniques (essentially consisting of obtaining leads, providing a demonstration intended to convince he customer of his need for the product, convincing the customer that the salesman had the solution to the problem, and utilizing well-known techniques for closing the sale) could be used to sell any unique product, from vacuum cleaners to aluminum siding to household brushes (Fuller brushes) to life insurance.

    I privately believed that this was ultimately a doomed scenario, for I had previously been exposed to and believed in what I would call the medical/professional model, where prosthetic devices (such as eyeglasses) were viewed as health related appliances, requiring specialized training to provide and under the control of medicine or allied professions. And in time, the hearing aid business began to shift away from specialty selling to the professional/medical model as greater numbers of consumers came to regard hearing aids as health related devices rather than commodities.

    With these thoughts in mind, are the times ‘they are a-changing’ in the same way specialty selling faded over the years, and is is the medical/professional model the essential distribution model the profession and the industry should hang its hats on? I wonder if you would comment on where you believe within the five categories you listed the professional/medical model falls/belongs? And secondly, with the advent not just of PSAPs, but of low cost distributors such as Wal-Mart and Costco, what do you suggest is the long term relevance or lack of relevance of the professional/medical model in the future? Personally, I wonder if the evolution of selling/marketing hearing aids is again about to transition to a new phase.

    Loving your discussion of distribution and I’m sure you’ve given lots of thought to these issues.

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