MarkeTrak V

Hearing Aid Industry Market

Tracking Survey

Sergei Kochkin, Ph.D.

Knowles Electronics, Inc.
June 1999
 MarkeTrak Topics

• Demographic indices & trends

• Customer satisfaction revisited

• Hearing aids in the drawer

• Subjective benefit
Demographic Indices
• National family opinion panel
– 80,000 households
– 13,492 hearing-impaired households
• Detailed questionnaire 2,720 hearing aid
owners.
• Response rate 83%
• No new survey to non-owners in
MarkeTrak V.
 Hearing Aid Market Penetration
25
24
23
23.8
% Penetration

22.9
22 22.6
21 21.3
20 20.4
19
18
1984 1989 1991 1994 1997
 Hearing-impaired User &
Non-user Population
25 Non-users Users Non-owners
21.7
20 20.6
20 19

15
Millions

10
4.9 5.1 4.6 4.7
5
0.8 0.7 1 0.9
0
1989 1991 1994 1997
Hearing Loss Population by Age Group
Owners versus Non-owners
85+
Owners
Non-owners
75-84

65-74

55-65

45-54

34-44

18-34

<18

0 1 2 3 4 5
Millions
 Clinton Announcement Spurred “Baby
Boomer” Potential Market Growth

5.5 • Clinton news

release 10/97.
5
• Survey taken 11/97.
Millions

4.5
• Age 45-54 hearing
4
loss growth =23%
1994
3.5
1997 • $60k growth =35%
3
34- 45- 55- 65- 75+
• Some college
44 54 65 74 growth = 30%
 Physician Screening for Hearing
Loss During Physical Exam

25
HIA Targeting with Physicians
20.2
20 18.8 18
16.3 16.6 16.6
Percent screened

15.1
15

10

0
May-89 Nov-89 May-90 Nov-90 Jan-92 Jan-92 Dec-97
 Binaural Penetration Trend
90
Total Owners
80
79 79
Total Owners - Current
70
70
Bilateral loss Ss - Current 65 65
60 61 60
50 51 52
47
40
37
30
20 22
25

10
0
1984 1989 1991 1994 1997
 Hearing Instrument Fittings by
Perceived Profession
70
1984
60
1991
Percent of fittings

50 1994
1997
40
30
20

10
0
Audiologist Physician H.I.S Other
Hearing Instrument Fittings by
Source of Distribution (1997)
% purchases
0 10 20 30 40

Audiology office

Hearing aid store

ENT office
VA

Home
Family Dr. Perhaps one to watch
Other

Hospital
Department store
Clinic 1997
1994
Military
Mail
 Third-party Payment Trend
30

25

20
% of sales

15
27.5
22.2 21.1 23
10 20.4
16.2
5

0
1984 1984 1989 1991 1994 1997
 Average Retail Price
to Consumer
1000
900 +24% +11% +30% +12%
800
700
1989
600
Dollars

1991
500
1994
400
1997
300
200
100
0
Total BTE ITC ITE
 Age of Hearing Instrument
50
Mean age of
45 instruments: 1991
40 1991 = 3.1 yrs 1992
35 1997
1994 = 3.7 yrs
30
% of sales

1997 = 3.8 yrs

25
20
15
10
5
0
<2 yr 3-4 yrs 5-6 yrs 7-8 yrs 9+ yrs
 First Time User Rate
Eddie
Albert Ads
60
53.4
50 FDA/FTC
Percent of sales

40.5 39
40

30 29

20

10

0
1989 1991 1994 1997
 Factors Influencing New
First Time Users to Purchase
% New users
• Factors less than 10%
70 mentions:
63
60 – Free HA (7%)
53
50 – Price (6%)
40 – Ad-magazine (5%)
26 30 – HL Literature (3%)
20 – Boss/co-worker (3%)
10 11 11 13
10 – Newspaper (2%)
0 – Direct mail (2%)
Family HA Owner ENT H.I.S. Audiologist Family H.L. worse – Ad - TV (1.5%)
Doctor
 Physician
Recommendation Trends
30 • 1989 - HIA advertising
Family to physician.
25 ENT
• Current initiatives:
% of new users

20 – Mfg. screening kit

– BHI - physician
15
handbook
10 – BHI - Academy of
Family Physicians
5
– AAA Best Practice
0 • Family doctor (Positive)
89 91 94 97
• ENT (Negative)
 Key Trends
• Negative trends
– hearing aid penetration

• Static trends
– hearing screenings by physicians
– distribution penetration
– Binaural penetration
 Key Trends
• Positive trends
– third party payment
– first time users
– repeat purchase
– retail price (??)
– Clinton - motivation of “Baby Boomers”
• 1 million new potential customers
Customer Satisfaction
Revisited
 Topics
• Trends 1991-1997 (1-5 years old)

• Segmentation (1-5 years old)

• Publishing of new research norms (3-12

months old)

• Hearing aids in the drawer (total)

 Method
• MarkeTrak Survey
– 4 behavioral items (hours, repurchase)
– 1 Quality of life
– Likert Satisfaction Scale
• 8 Product features
• 12 Performance/value
• 13 Listening situations
• 6 dispenser attributes
– Modified APHAB (21 point scale = 5%)
 Customer Satisfaction by Age of
Hearing Instrument
80
70
60
% Satisfaction

50
40 73
30 63 60 59 58 53 53 53
20 43 42
10
0
<3 mo. 4-6 mo. 7-12 2 yr. 3 yr. 4 yr. 5 yr. 6 yr 7-9 yr. 10+ yr.
mo.

Age of hearing aid

 Amount of Time Spent Counseling
New Users of Hearing Instruments

35
30
25
% new users

20
15 29.4
23.3
10 20.1
5 11.5
2.6 7 6.1
0
None 0.25 0.5 0.75 1 2 3+
Time spent in counseling (hours)
 Customer Satisfaction as a Function of
Time Spent with New Users
80
70
60
% satisfaction

50
40
65 68
30 55 59
20 45
10
13
0
None 0.25 0.5 0.75 1 2
Time spent in counseling (hours)
 Multiple Environmental Listening Utility
(MELU) is Critical to Satisfying Consumers
100
90
80
Overall satisfaction

70
60
50
40
30
20
10
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Number of listening situations satisfied
 Perceptions of Benefit as a Function of Multiple
Environment Listening Utility (MELU)

100
Satisfaction (%) with Benefit

90
80
70
60
50
40
30
20
10
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Number of listening situations satisfied
 Quantifiable Client Oriented
Scale of Improvement (COSI)
• MarkeTrak measures satisfaction in 13 listening
situations (5 point scale).
– Very Satisfied (+2) to very dissatisfied (-2)
• Also “Importance” of hearing in these 13 listening
situations (0-3 point scale)
– Not important (0) to very important (3)
• Score = Satisfaction x importance
• Total score = Sum (all situations x need)/Total
possible score
 Quantifiable COSI - Strong
Predictor of Perception of Benefit
100
90
80
70
60
% Very
50
satisfied
40
30
20
10
0
-50- -1- 0 10 20 30 40 50 60 70 80 90 100
100 49
COSI (% Need Met)
 U.S. Customer Satisfaction Trends
No significant differences (H.A. 1-5 years.)

70 Positive
60 Negative
50
% Satisfaction

40
30 60 57 59
20
10 18 17 15
0
1991 1994 1997
 U.S. Customer Satisfaction New
Hearing Instruments (<1 year)
• Declines (+5%)
80 Positive Negative
– Battery life
70
– Adjust. V.C.
60
– Value ($$/performance)
50
• Gains (+5%)
40
% Satisfaction

71 – Visibility
30 66 63
– Localization
20 – Outdoors
10 – Place worship
12 7 10
0 – Telephone
1991 1994 1997 – Post fitting service
 Customer Satisfaction Trends
• MarkeTrak V significantly higher than:
– MarkeTrak IV (1994) :
• 23 of 33 items (p<.01)

– MarkeTrak III (1991):

• 4 of 33 items (p<.01)
 Customer Satisfaction Trends
• Key improvements (1997 vs.1991 & 1994):
– Outdoor enjoyment
– Phone usage
– Value
– Explain care of hearing aids

• Visibility ratings are lower than in 1991

 The introduction of CICs Probably Caused
Post-purchase Cognitive Dissonance with
Visibility of Instrument
90
1991
80 86
1997
79
% Satisfaction

70 73
67
60 62 60
57
50

40

30
BTE ITE ITC CIC
 Satisfaction Segmentation
• by type of hearing loss
• by style of hearing aid
• Programmable/non-programmable
• Telecoil
• Hearing aids without volume controls
• New user versus repeat user
• Binaural versus monaural
 Overall satisfaction
by Style of Hearing Aid
ITC/Invisible 66

ITC/Visible 56

ITE/Partial 57

ITE/Full 58

BTE 61

50 52 54 56 58 60 62 64 66 68
% Satisfaction
 Satisfaction by Style
of Hearing Aid
• CIC rated superior on 15 attributes.
– Visibility
– Comfort with loud sounds
– Listening situations (7 of 13)
• Telephone, Outdoors, workplace,
Groups, restaurant
• CIC rated lower on battery life, V.C.
– 34% w/o a V.C. want one
 Satisfaction by Style
of Hearing Aid
• BTE rated significantly lower:
– Ability to hear soft sounds
– Difficult listening situations
– Tell direction of sounds
• BTE rated higher
– Hours worn
– Battery life
• Are lower ratings due to degree of loss?
 Customer Satisfaction by
Perceived Level of Hearing Loss

Profound 66
Degree of Hearing Loss

Severe 58

Moderate 60

Mild 48

0 10 20 30 40 50 60 70
% Satisfaction
 Customer Satisfaction by
Perceived Level of Hearing Loss
• Mild loss significantly lower on 13
attributes
– Quality of life
– Likelihood of repurchase/recommend HA
– Wearing of aids
– Perception of benefit
– One-on-one communication
 Customer Satisfaction by
Perceived Level of Hearing Loss
• Profound lower on 15 attributes:
– Perceived benefit
– Fit and comfort
– Ability to hear soft sounds
– Localization
– Whistling/feedback
– Nearly all listening situations
• Yet, they give the highest overall rating.
 What about the volume control?
Overall Customer Satisfaction
• 9% report they have
none. 100
90 82
• 37% want one. 80

% Satisfaction
70
• Big differences on 60 52 49
50
satisfaction. 40
30
• Should make sure 20
consumer can live 10
0
without a volume Don’t Not Need
control. Need sure VC
VC
 The Binaural Advantage
(Rated higher on 15 attributes)
Concert/movie 8
Church 8
Sound of voice 8
Car 9
Outdoors 9
Small groups 11
Able to hearing soft sounds 11
Localization 14
Overall 3

0 2 4 6 8 10 12 14 16
% Satisfaction (Difference score)
 The Telecoil Advantage
(Rated higher on 8 attributes)

Recommend HA 9

Outdoors 10

Quality of life 11

Whistling/feedback 12

Telephone 18

Overall 2

0 5 10 15 20
% Satisfaction (Difference score)
 The Programmable Advantage
(Rated higher on 37 attributes)
Car 13
Telephone 14
Noisy situations 14
Warranty 15
Place of worship 15
Small groups 16
Whistling/feedback 16
Comfort/loud sounds 16
Overall 10

0 5 10 15 20
% Satisfaction (Difference score)
 New Users More likely to be
Dissatisfied with Their Experience
• 54% overall satisfaction new users
– versus 63% for repeat users
• New users rate 16 items lower
– Quality of life (-21)
– Recommend hearing aids (-12)
– Repurchase , reliability (-10)
– Battery life (-8)
• New users rate 5 items higher
– Able to hear soft sounds (+10), Large group (+7)
 Key Findings
• Modest improvements since 1991
• Major improvements since 1994
• Strong advantage in favor of
– Programmable
– Telecoil
– Binaural
– CIC
• Mild hearing loss & new users less satisfied
 Key Findings
• CIC introduction - probable negative impact
on larger instrument satisfaction.
• Lack of a VC could depress satisfaction for
some segments of users.
• Importance of:
– Counseling time spent with consumer
– Multiple environmental listening utility
(MELU)
– Volume control to some users of CICs
Hearing Aids in the Drawer
 Methodology
• Consumers who own a hearing aid but
NEVER wear it = hearing aid in the drawer.
• Hearing aids in drawer = 16.2%
respondents.
• Told to explain why non-use in MarkeTrak
survey.
• Received 348 letters.
• Content coding yielded 567 comments.
 Hearing Aids in the Drawer are
Related to Age of the Instrument
40
35
30
Percent in drawer

25
20
15
10
5
5 8 14 15 20 23 20 29 36 32
0
1 2 3 4 5 6 7 8 9 10+

Age of hearing aid (years)

 907,120 Customers do not Use
Their Hearing Instruments
120
325,000 1-4 years
100

80
Volume
60
(000)
40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Age of hearing aid (years)
 Reasons for Non-Use
• Poor benefit (30%) - 268,507
 Reasons for Non-Use
Poor Benefit
• “I threw it away it was worthless to me”

• “I don’t see much difference with them. I feel I

was sold one under false pretense. Don’t feel I
really needed one”

• “There is no improvement in my hearing with

the aids. Where there is a slight improvement in
my hearing, it is minimal.”
 Reasons for Non-Use
Poor Benefit
• “I don’t wear the aids at all. The problems
appears to be clarity of words. Volume is
OK but I can’t distinguish words”

• “I have not been able to wear the H.A.

since the day I received it. It was made
wrong and the Company said there was
nothing wrong with it.”
 Reasons for Non-Use
Poor Benefit
• “It is not worth the trouble or expense for the
small difference in hearing. I wish I had my
money back.”

• “_____ aims at taking old people’s money for

little value.”

• “All the aids do is amplify the sound that I

can’t discriminate with an aid in the ear.”
 Reasons for Non-Use
Poor Benefit
• “When ______sold me the H.A., I was
confident it would help me hear better.
When I received it and wore it every day, it
did not make my hearing any better. So, I
don’t wear the HA and feel like I wasted
my money. I tried to return it and the
person did not seem to want to help me. I
am quite dissatisfied with the whole
experience.”
 Reasons for Non-Use
Poor Benefit
• “I can’t hear high pitch sounds with the
behind the ear model.”

• “H.A.s amplify everything but human

voices which is what you need to hear.”

• “____plugs are not worth the price.”

 Reasons for Non-Use
• #1. Poor benefit (30%) - 268,507
• #2. Background noise (25%) - 229,383
 Reasons for Non-Use
Background Noise
• “I will not wear my H.A. because it increases
background noise. And therefore, after a
while I get a headache and get somewhat
nervous.”

• “It catches all the sound on the road, TV, etc

at the same time.”

• “Background noise is distracting.”

 Reasons for Non-Use
Background Noise
• “H.A.s don’t work when there is a lot of
background noise. This is when you need
them to work.”

• “Background noise really drives him crazy.”

• “My problem is with background noise. All

my H.A.s do is amplify so they are of little
help.”
 Reasons for Non-Use
Background Noise
• “I don’t wear my H.A. because I need it at a
dance, restaurants, and large groups. All
the H.A. does is increase all sound
including background sounds. No help.”

• “Sudden loud noise is a killer.”

• “H.A. amplify other sounds so much that I

actually feel pain.”
 Reasons for Non-Use
Background Noise
• “If someone drops a spoon on the table it
is like a rifle going off.”

• “Hate them. They don’t work for me. All

sounds are amplified. Never knew there
were so many. I can’t adjust the H.A.
constantly to every noise.”
 Reasons for Non-Use
• #1. Poor benefit (30%) - 268,507
• #2. Background noise (25%) - 229,383
• #3. Fit & Comfort (19%) - 169,431
 Reasons for Non-Use
Fit & Comfort
• “My hearing aids are too big for my ears.”

• “It is uncomfortable and my wife says I

don’t listen to her anyway.”

• “It hurts my ears.”

• “I do not like the feel of it in my ear.”

 Reasons for Non-Use
Fit & Comfort
• “I don’t wear my H.A. because they plug up
my ears and feel uncomfortable.”

• “My H.A. has the tendency to fall out when

I am working hard in hot weather.”

• “It’s hard to keep it in my ear. I travel for

business a lot and can’t risk it falling out of
my ear.”
 Reasons for Non-Use
• #1. Poor benefit (30%) - 268,507
• #2. Background noise (25%) - 229,383
• #3. Fit & Comfort (19%) - 169,431
• #4. Negative side effects (11%) - 99,048
 Reasons for Non-Use
Negative Side-effects
• Ears that hurt
• Too much pressure in the ears
• Blisters in ears
• Rashes in ears
• Itching ears
• Dizzy
• Nervous
 Reasons for Non-Use
Negative Side-effects
• Ears that sweat
• Builds up wax in inner ear
• Headache
• Hair gets caught in hearing aid
• Infections in ear
• Problems chewing or swallowing
• Plugs up ears
 Reasons for Non-Use
• #1. Poor benefit (30%) - 268,507
• #2. Background noise (25%) - 229,383
• #3. Fit & Comfort (19%) - 169,431
• #4. Negative side effects (11%) - 99,048
• #5. Price & cost (10%) - 93,839
 Reasons for Non-Use
Price & Cost
• “I bought the H.A. when I was teaching. I
had trouble hearing student’s questions.
Since retiring I have stopped using them.
They were costing too much for what good
I was able to get from them.”

• “Programmable H.A. would be desirable

but they cost too much.”
 Reasons for Non-Use
Price & Cost
• “My current H.A. are broken & I am
unable to afford the cost of a replacement.
They are too old for service.”

• The expense of owning and maintaining

are too great.

• HMO does not cover for HA. Price is high.

 Reasons for Non-Use
Price & Cost
• “I enjoyed my H.A., but they burned up in a
house fire and I can’t afford another one.”

• “I wish an aid would be developed to allow us

to hear natural sound and an aid with a
reasonable price.”

• “If I could afford it, I would buy a different

brand.”
 Reasons for Non-Use
Price & Cost
• “My H.A. was never dependable. Taking
it in for an adjustment was only a
headache as it never performed very long.
Had to be looked at again. The last time I
had trouble, the office wanted to send it to
_____ at $200 & just to check it, plus
another $200 to repair it.”
 Reasons for Non-Use
• #1. Poor benefit (30%) - 268,507
• #2. Background noise (25%) - 229,383
• #3. Fit & Comfort (19%) - 169,431
• #4. Negative side effects (11%) - 99,048
• #5. Price & cost (10%) - 93,839
• #6. Don’t need help (8%) - 72,987
 Reasons for Non-Use
Don’t Need Help
• “I work and live alone and do not need the
aid most of the time.”

• “I had an operation on my right ear and I

can hear better again.”

• “I don’t talk to anyone during the day.”

 Reasons for Non-Use
Don’t Need Help
• “I can hear most everything without
H.A.s”

• I feel I was sold under false pretense. I

don’t feel I really needed one.”

• “Don’t wear very often since my hearing

loss is only 35 degrees.”
 Reasons for Non-Use
• #1. Poor benefit (30%) - 268,507
• #2. Background noise (25%) - 229,383
• #3. Fit & Comfort (19%) - 169,431
• #4. Negative side effects (11%) - 99,048
• #5. Price & cost (10%) - 93,839
• #6. Don’t need help (8%) - 72,987
• #7. Broke or does not work (8%) - 68,814
 Reasons for Non-Use
Broke or does not Work
• “After a year, the H.A. is down. I can’t
afford to repair them.”

• “Because it doesn’t work. ______ refused

to do anything. The man that sold it to me
has been fired.”

• “It does not work right.”

 Reasons for Non-Use
Broke or does not Work

• “I don’t wear it because after the warranty

expired it got broken. It would cost $1,200
to replace it, so I quit wearing it.”

• “The housing is currently broken and will

have to be glued back together. This is the
fourth time it has broken.”
 Reasons for Non-Use
Broke or does not Work
• “It seems as if the aids were in the shop
for repair more than in my ear. They are
still not adjusted correctly for my comfort
level. The cost of the repairs were too
much. It is easier to go without them and
have everyone speak louder.”

• “I have 2 H.A.s that don’t work. It costs

$200 a piece cash to have them fixed.”
 Reasons for Non-Use
• #8. Sound quality (6%) - 57,329
 Reasons for Non-Use
Sound Quality
• “Never got true sound clarity I wanted”
• Uncomfortable sound
• Sound of crickets
• Unnatural
• Distorted
• Slight hiss
• Tinny
• Picks up wind
 Reasons for Non-Use
Sound Quality
• Chewing and swallowing noise
• Poor fidelity
• “Can’t stand sound of my voice”
• Hollow sound
• Aversiveness of sounds (running water,
sharp sounds)
 Reasons for Non-Use
• #8. Sound quality (6%) - 57,329
• #9. Won’t wear - unspecified (6%) - 57,556
• #10. Volume control adjust. (5%) - 44,314
 Reasons for Non-Use
Volume Control Adjustments
• “I have trouble adjusting the sound.”

• “Hard to adjust. Every time the phone

rings I have to adjust the volume.”

• “They need adjusting, because the

background noises are annoying.”
 Reasons for Non-Use
Volume Control Adjustments

• “They are a bother having to turn up &

down too often.”

• “The volume never stays at setting.”

• “I can’t adjust H.A. constantly to every

noise.”
 Reasons for Non-Use
• #8. Sound quality (6%) - 57,329
• #9. Won’t wear - unspecified (6%) - 57,556
• #10. Volume control adjust. (5%) - 44,314
• #11. Whistling & feedback (4%) - 39,100
• #12. Nuisance / hassle (4%) -38,371
• #13. Poor service (3%) - 28,673
• #14. High frequency Loss (3%) - 26,067
 Reasons for Non-Use
• #15. Stigma of wearing (3%) - 26,037
• #16. Profound hearing loss (3%) - 23,460
• #17. Work in limited situations (3%)-
23,460
• #18. Uncomfortably loud (2%) - 27,114
• #19. Battery life (2%) - 19,186
 Reasons for Non-Use
1% or less of mentions
• Does not work on • Family pressure
phone • Feels like ear plugs
• Monaural aids • Poor directivity
inadequate • Low gain
• Expectations not met • Lost hearing aids
• Has Tinnitus • Ear wax problem
• Manual dexterity • Rare social user
• Forget to use
 Key Findings
• 907k inactive hearing aid owners
• Key reasons:
– Poor benefit
– Background noise
– Fit and comfort
– Cost
– Negative side effects
– Hearing aids broke
 MarkeTrak V - Conclusions
• Significant opportunities for improvement.

• Encouraging positive trends.

• Huge opportunity still waiting to be tapped.

• Need to find new marketing methods to

reach “Baby Boomers”.