Summary: The absence of growth in the hearing aid industry is explained in terms of (1) a 25-50% smaller market than previously reported in the industry literature, (2) the observation that hearing aid owners (more than 50%) do not buy replacement hearing aid systems, (3) a hearing aid replacement rate (by those replacing) of five years instead of three, (4) unrealistic expectations for hearing-impaired individuals, and (5) unrealistic expectations for those in the dispensing community.
A paradox exists between the sales performance of the hearing aid industry and the generally accepted assumptions about the market size and saturation level. It's thought that the market consists of 16-20 million individuals who are hearing impaired, and that there is only a 20- 30% saturation level. If this is true, and if we are only selling 1.13 million aids per year, then there should be a great opportunity for growth. Therefore the absence of growth must make us not only evaluate our delivery system; but also re-evaluate our generally accepted data and conclusions.
The data and conclusions about market size and market constituency will be examined in this paper long with the published results and conclusions of survey data from the Hearing Industries Association1,2 (HIA), Hearing Instruments3 (HI), and The Hearing Journal4 (HJ). In addition, data from a study of 422 clients from Hearing Centers Network (HCN) will be compared.
The Methods employed in this study can be found at the end of the paper.
Much of the data and conclusions to be addressed are conveniently presented in the Hearing Industries Association publication "Marketing Edge." This publication is a summary report of the "HIA Survey of the Hearing-Impaired Population." Obtaining a copy of the original Survey was prohibitively expensive, so the secondary source Marketing Edge was used.
Marketing Edge reports a market of 16.4 million hearing- impaired individuals, 14.4 million of whom admit they have a hearing problem. Of the 14.4 million, 3.9 million own a hearing aid (Users"); 1.5 million intend to buy ("Intenders"), and 9 million do not intend to buy ("Nonintenders") (see Figure 1).
The Non-Owners (Intenders and Non-Intenders) are Characterized in the report as (1) 60% having "unilateral" hearing losses, and (2) averaging 55 years of age. ("In fact, most non-owners are in the 30-50 age group."1). The report states the main reasons why 9.0 million do not intend to buy is (1) they believe the hearing loss is not severe enough, and (2) they believe that a hearing aid will not help their type of hearing problem.
Marketing Edge concludes that:
(1) The hearing aid market consists of 14-16 million people.
(2) The market is only 29% saturated, with an opportunity to expand an additional 71%.
(3) Appropriate marketing aimed at younger hearing- impaired individuals, or unilateral losses, or at medical referral sources could increase market penetration.
This study will examine those conclusions and attempt to analyze the constituency of the three sub-populations, Users, Intenders, and Non- intenders.
While dispensing offices do not see non- intenders often, the characteristics that describe them can be analyzed to determine if they are candidates for hearing aids.
This HCN report takes exception to including all of the 9 million non-intenders into the market for the following reasons:
Age Spectrum. The HIA study reports that most of the non- intenders are between the ages of 30-50 years old. It appears that most young individuals with milder losses do not consider their hearing losses significant problems.
Few 30-50 year olds came to our office. The HCN study results show this group of individuals as being less than 7% of our Aid Inquirees (AIs) (Figure 2). The average age of the AIs was 69 years old with 70% of this group being above 65 years old. It should be noted that the largest percentage of unaided AIs were between the ages of 55-70 years old.
While the clients participating in the HCN study were obtained from a variety of sources, audiologists, customer referrals, physician referrals, inserts in newspapers, direct 55+ mailers, miscellaneous other sources and repeat clients (Table 1), the average age for all client sources ranged between 66-76 years of age, with the exception of those clients referred by audiologists (averaging 48 years old), due to 12% of their referees being below 20 years old. The 30-50-year-olds either do not complain in large numbers to these physicians or audiologists, or they are less motivated to inquire about hearing aids.
While dispensing audiologists in private practice or in clinics show a greater shift to include the under-18-yearolds, they apparently do not see a large percentage of 30- 50 year old non- intenders according to the HI survey. This infers that this 30-50-year-old population of nonintenders does not desire hearing aids from physicians, audiologists, or hearing aid specialists.
Younger individuals are better equipped mentally to compensate for mild or unilateral hearing losses. They process speech faster than older individuals with similar losses and are better able to attend to speech in noise. Therefore similar hearing losses are less of a problem to the younger individuals. They are much better able to compensate for mild hearing losses.
Therefore the 30-50 year olds are not good candidates for hearing aids.
When does a hearing loss become a hearing problem? Probably only when the individual or his significant others recognize it as such. Just because a particular level of hearing is mathematically outside of a norm, or an arbitrarily defined "low fence," this does not indicate that the individual is significantly impaired, from the individual's own point of view.
We shouldn't forget that the audiometric standards for evaluating the degree of hearing loss were for the utilitarian, medico-legal purposes, not for determining actual individual impairment, which is notably complex. For Hearing Aid Industrial purposes we need to know when does a hearing loss become a hearing problem for the individual, and, when do we have the capabilities of aiding that individual with his/her problem.
It should be noted that 16 individuals came into our office complaining that their hearing losses were a problem some or most of the time, and these individuals measured as bilateral normals. It is even difficult for the individual to recognize the actuality of a hearing loss, as opposed to a hearing problem that he/she may have.
Mild Losses. It is more difficult to demonstrate the benefits of a hearing aid to an individual with a mild loss than to an individual with a moderate or severe loss. Besides this being common sense and common experience, it correlates with the HIA's observation that the non-intenders have the mild losses. This difficulty in demonstrating benefit is especially notable if the individual has a precipitous type of high frequency loss or discrimination problems.
Our results show that whether or not a client purchases a hearing aid correlates to the degree of bilateral hearing impairment (Figure 3 and 4). As can be seen from Figure 3, converting 50% of nonaided AIs into purchasers occurs at a bilateral hearing impairment level of about 25%.
Three examples of a 25% bilateral impairment are: (1) a bilaterally, symmetrical, flat loss at 42 dBHTL; (2) a bilateral, symmetrical, ski slope loss of 20, 30 50, 70 dBHTL at 500, 1000, 2000, and 4000 Hz; and (3) an asymmetric loss of 15% in the better ear and 75% in the poorer ear. It should be noted that a unilateral normal with a dead ear is classified as a 17% bilateral impairment.
If we compare this figure of 25% with the audiometric data from the Wisconsin State Fair in 19546, we calculate that the average male 55, 65, and 75 years old has a hearing loss of 0, 19, and 27% respectively. The average for females of the same ages is calculated as 0, 0, and 20% respectively (Table 2).
This 25% hearing loss level corresponds to the average 75-year-old's hearing loss from the Wisconsin State Fair study. It implies that if the 75-year-old males were randomly chosen, 50% would purchase hearing aids, all other factors being equal. Of course as we get to the younger age brackets, the probability of purchasing goes down.
Our results indicate as well that individuals with significant hearing losses of the precipitous high frequency type, or, with the milder losses with significant discrimination problems (esp. in noise), do not easily become purchasers. In fact, our HAEs indicate that most purchasers who end up being non- users fall into this category.
Therefore clients with milder losses of less than 15% are not especially good candidates. This will be seen again, more clearly, in Figure 4.
Unilateral Losses. Unilateral hearing loss individuals are rarely seen in a hearing instrument specialist's office.
While the HIA study indicates that 60% of the non- intenders have "unilateral" losses, it is unclear as to whether these individuals are objectively, audiometrically unilateral losses with one normal ear, or whether they are subjectively asymmetric in their hearing abilities and just claim that one ear is poor as compared to the other. The HCN study indicates that only 7% of the AIs had true audiometrically unilateral losses with one normal ear, and only 20% of these clients purchase hearing aids. The purchasers generally had unique needs or a more significant percentage bilateral impairment. (As mentioned above, a unilateral normal with a dead ear calculates to a 18% bilateral impairment.)
Asymmetric Losses. Nineteen percent of the AIs had an asymmetric hearing loss with interaural differences of greater than 10dB. The degree of asymmetry did not correlate with those who purchased a hearing aids system.
As can be seen from the AAOO equation calculating binaural hearing impairment7, a recognition appears to be present that the better ear has a five times greater effect on bilateral impairment than does the poorer ear. Interviews with our clients indicate that one good ear, especially in younger clients, will allow for near normal function. An older client, and/or one with special needs may experience the effects of the poorer ear much more severely.
Therefore individuals with true unilateral hearing losses are not good candidates.
SNAPS. The sensori-neural auditory processing disability of an older client may not allow the client to successfully discriminate speech, especially in noise, even with a hearing aid system.
While younger clients can compensate for the inaudibility of certain sounds, the older person is Hearing Centers Network Publication, Magilen, G., 1990 6 not so fortunate. Many older individuals, especially those with sensori- neural hearing losses (SNHL), can be described as having more a hearing syndrome than a hearing impairment. A hearing impairment implies that improving the hearing will solve the individual's problem, however we know that this is not the case.
Many older individuals have sensori-neural auditory processing syndrome (SNAPS). Besides the decrease in audibility of sounds with age, often, older individuals with SNHLs process speech more slowly, are less attentive, can accommodate new sounds less easily, are more distractible, irritable, less interested, etc. Without the mental tools necessary to take advantage of the new sounds given to them by the hearing aid, the older individuals may find themselves less motivated to try the benefits of a hearing aid system.
It appears that long-term sensorineural impairment tends to have retrograde effects not only physiologically, but also in information processing at the central level. Poor discrimination in noise, poor discrimination in quiet, increased sensitivity to loud sounds, all contribute to a syndrome whose affects must be sensitively addressed by the dispensing professional on an individualized basis with the client.
It is not a surprise to find that such individuals with SNAPS, especially those with mildmoderate losses feel that a hearing aid "will not help their particular type of hearing problem" as said in the HIA report. The problems they are facing are significantly more complex than the inaudibility of speech sounds.
Therefore the older client with SNAPS is not a good candidate for a hearing aid, in the absence of sensitive counseling with realistic expectations.
The Bottom Line is: People don't buy hearing aids because they have a hearing loss, but because they have a significant, correctable hearing problem.
While HCN considers "intenders" in the market, we take exception with the inclusion of all these individuals as real candidates for hearing aids for the following reason: only 40% of these individuals in our study go on to get hearing aids.
Of the 422 AIs, 243 were initially non-users and can be considered "intenders." As mentioned above, 16 of these had no hearing loss and of the remaining 227, only 40% went on to purchase a hearing aid system. The explanations of severity of loss, capability to compensate and inability to successfully obtain sufficient value from current hearing aids have already been discussed above.
It is possible that this single office study unintentionally selected for a population of more severe hearing losses and/or deselected for the aiding of the milder losses, by its procedures or the lack of skill of the dispenser. It is possible that other offices could fit these milder losses more successfully than in our office.
Although this may indeed be a factor, it is interesting to note (figure 4) that "repeat clients from Hearing Centers Network Publication, Magilen, G., 1990 7 competitors' offices" had the same hearing loss distribution as those both new and old users from our office. This indicates that both we and our competitors have difficulty motivating mild hearing loss intenders into hearing aid systems.
Figure 4 clearly shows that mild hearing loss clients do not purchase hearing aids as readily as clients with moderate or severe losses. Therefore many of the milder hearing loss intenders are not good candidates.
While "users" have a high probability for being in the market, all of these cannot be included in the market as well, for the following reasons.
Just because an individual has purchased a hearing aid does not mean that he is in the market.
It has been generally assumed and often stated at seminars that clients replace hearing aids every 3-3.5 years. Analysis of our repeat clients resulted in an average replacement period of 5 +/2 years. In fact, the time of replacement of a hearing aid system appears to have little to do with the physical condition of the old hearing aids.
While it was encouraging to see that sales to our repeat clients constituted 37% of annual sales, it was discouraging to see that this number, however, only represented 6.1% of our past purchasers. If we were expecting our clients to replace their hearing aids at an average of every 5 years, we would expect a figure of 15-20% repeat sales depending upon the growth rate of the business.
Why do 6.1% repeat instead of the 15-20% we would expect from a 5 year turnover?
The explanation has to be that a significant sub-population of clients never replace their hearing aid systems.
It should be noted that client mortality, and clients who move out of the area were not a significant factor in these calculations since the list of clientele was regularly cleaned through first class mailings at least four times per year.
Who are these non-repeaters?
Client Loyalty? Since we found that 20% of our sales are to clients from competing offices, certainly some percentage of our clients go to our competitors (hopefully a small percentage). The HI survey reports that generally 11% of sales come from other offices. However, as an estimate, even adding back a full 20% of sales that may go to other offices, this would only account for an additional 3.2%, yielding a percentage of repeat buyers of 9.3%. This is still significantly less than the 15-20% we should expect.
Therefore non-repeating clients account for more than half of our clientele of past purchasers. Hearing Centers Network Publication, Magilen, G., 1990 8 An additional conclusion must be that (1) some clients buy a hearing aid system and never use them, and/or (2) others may use then so infrequently that one hearing aid can last a lifetime.
How well does this study correlate with national statistics on repeat business?
The HJ reported industry sales of 1.13 million aids in 1989. If we assume 50%binaural (HI reports 45%; HCN has 65%) this translates into 753,000 clients for 1989. In our study sales to "users" (ours or others) constituted 57% of sales; the HI survey reports 35% of sales (24.4% repeaters plus10.6% to others clients). If we take 45% to get a ballpark number of sales to repeaters, we get 753,000 X 0.45 = 340,000 repeating clients in 1989.
If 340,000 clients repeat, and the HIA reports 3.9 million users, then the annual percentage of users repeating is 8.9%. This number is very similar to the annual 9.3% for repeaters at HCN.
If the repeaters replace hearing aids every 5 years, then again we could expect 15-20% of the 3.9 million to be getting new hearing aids (this would be 6-800,000 repeaters). Since it appears that only 340,000 repeat we can therefore assume that more than half of the users are not being repeat sales. If we assume a 3-3.5 year turnover, then the percent of non-repeaters gets even higher.
Therefore the general market appears to contain a significant number of users who do not return to purchase new hearing aids.
What then is the Actual market size?
With partial data it is difficult to draw good conclusions, only "guestimates" (Figure 1).
If we eliminate from the 9 million :non- intenders" the "unilaterals," most of the borderline milder losses, the unfittables, and most of the under-fifty crowd, we can guess a range of 2-5 million "non- intenders" can be converted to users.
If we eliminate 40-60% of the intenders, because only 40% of our intenders purchased hearing aids, this leaves 0.6-0.9 million possible candidates.
If we remove from the users those who have purchased in the past two years (0.8 million), and those who are one-time buyers (guess 0.5-1.5 million), that leaves 1.6-2.6 million potential buyers.
This leaves a range for the total market at 4.2-8.9 million.
1. Surveys of the hearing impaired population in the United States are important to both the manufacturer and dispenser for evaluation of (1) market size, (2) market penetration, (3) industry growth rate, (4) profiles of the unaided hearing impaired population (5) factors for product planning and development, and (6) dispenser's cost effective management of the hearing impaired population. The dispenser is generally operating on a limited budget and cannot afford to spend his/her marketing dollars foolishly.
While it is a difficult task to assess an industry by soliciting voluntary, un-audited business statistics from the dispensing population, one must admire the needed effort, yet be discriminating in drawing conclusions. Generally in studies of this type data is often presented in percentages making it difficult or impossible to extract real numbers for independent re-evaluation.
Although the HCN study consists of data from a single dispenser, the numbers correlate fairly well with the statistics from the HI survey. The author encourages other office to analyze their "Real Market."
2. The Market is 4.2 to 8.9 million individuals with addressable hearing problems. This is 2-4 times smaller than reported in the HIA survey, as reported in Marketing Edge.
One must remember, from the methods employed in this study, these figures describe the number of people who are available to successfully buy a hearing aids system. It is not the number of people to whom you can sell or prescribe a hearing aid. There is a difference between selling hearing aids, and having people buy them. It's a difference of "Method," and it has long range effects on the hearing aid industry. A talented salesman (dispenser, audiologist, or physician) could sell hearing aids to anyone with a minor need, irrespective of degree of benefit.
HOWEVER, if a client is SOLD or PRESCRIBED a hearing aid and doesn't wear it, he not only doesn't refer others, he affects the attitudes of many other potential users.
While we can play with the numbers to arrive at market saturation, the author will leave that for others to calculate.
3. The illusion of great opportunity in the hearing aid filed may have over-saturated the market with more dispensing individuals than the "real market" requires. This would result in a more competitive, less successful dispensing community. If the average dispenser does 11-20 aids per month (HI), yet is capable of 40-70 (HCN), then we are not functioning near capacity.
We don't need more dispensers, probably fewer and better.
4. An emphasis on trying to get non- intenders into hearing aid systems could have negative repercussions. If these individuals do not do well with hearing aids, it reflects upon the reputation of the dispenser, audiologist, and physician. This also further damages the reputation of the effectiveness of hearing aids in general.
It's easier, less expensive, and more pleasurable to dispense hearing aids to people who want them, than to people who don't.
5. This study is not intended as a complete scientific study, it is not. It is intended to present data from real clients and to stimulate discussion and research.
If the conclusions prove valid the author is not encouraged by the prospect for rapid, future growth. However, an over-saturation of dispensing individuals will lead toward a selection of Hearing Centers Network Publication, Magilen, G., 1990 10 those most capable of serving the needs of the hearing impaired population. Manufacturers and dispensers will strive for market share by trying to fit the needs of the user population already in existence, as opposed to trying to open new market populations like young mild loss individuals.
Methods : The study population consisted of 422 Aid Inquirees (AIs) obtained from the sources listed in Table 1. The AIs consisted of 114 aided repeating clients from our office, 65 clients wearing competitors' hearing aids, and 243 unaided AIs. Welfare clients were not included in our study. The AIs were assessed for the successful completion of a hearing aid trial period resulting in the purchase of a hearing aid system.
The data presented in the HCN study was obtained at a single, mid-sized hearing aid office, with a client list of 2,728 individuals (living and local), located in a town of 100,000 people, with about 10-15 competitors (two other dispenser and audiologist offices on the same city block). The office had a single dispenser and two full-time employees. The office, marketing and financial tasks were completely computerized with a self designed Apple® Macintosh based network (MacHear). Annual sales of the business grew from an average of nine aids per month to forty-three aids per month over the past eight years. Educationally, the dispenser had a MS in Physiology, PhD in Biophysics, and five years of post-doctoral neuroscience research funded by the National Institute on Aging.
The percentage hearing loss was calculated as in the "Guide for the Evaluation of Hearing Handicap"5 with the exception of the use of octave thresholds at 500, 1000, 2000, and 4000 Hz.
A client was accepted for the study, and called an AI if they kept their first hearing test appointment. All AIs were aware, before the appointment, of the potential costs of a hearing aid system and of the details of the Trial/Rental Plan. The hearing test was free.
During the initial test appointment clients were given a hearing aid evaluation, which included a demonstration of hearing aid benefits in both quiet and noise. The demonstration employed a master hearing aid, BTEs, ITE, and/or stock canal aids as appropriate.
After the demonstration of amplification, and a thorough discussion of the benefits and limitations of amplification, the AIs were offered an opportunity to "Try" or "Rent" a hearing aid system for six weeks at a total cost of $10.00. The $10.00 cost included all testing, materials, and office visits. Security deposits were taken in some cases and not in others depending upon the personalities and financial capabilities of the AIs. The AIs were counseled to try a hearing aid system if they experience any benefit at all from the hearing aid demonstration. Aids were selected and clients were fit by the methods described in the Hearing Centers Network publication "Guided Selection Method." Clients were considered successful purchasers after completion of the trial period and the personal evaluation that the hearing aid was worth the $500.00 to $900.00 they paid per aid.
* The purpose of this and the accompanying articles is to present a point of view which hopefully will serve the best interest of all of us in the hearing healthcare industry and our clients. A key consideration is that we have been working hard to fit hearing losses, rather than solve hearing problems. The difference between fitting and hearing loss and fitting a hearing problem is solely in our approach to serving the client, and this slight difference many mean tremendous change in our success. It is hoped that the ideas and methods suggested here might contribute toward the future growth of our industry.
The average monaural hearing loss was obtained by adding the dB HTL levels at 0.5, 1, 2, and 4kHz and dividing by four. A "low fence" of 25dB was subtracted and the remainder multiplied by 1.5%.
Percent binaural hearing handicap = (5 x % (better ear) + (1 x %(poorer ear))/6. From reference number 5 above.
Gil Magilen, M.S., Ph.D.
Dr. Gil Magilen, born in Brooklyn, New York, has a M.S. in Physiology from Long Island University (NY) and a Ph.D. in Biophysics from the University of California at Berkeley. He was a research neurophysiologist studying aspects of neurotransmission at the University of California Medical Center in San Francisco in the Department of Neurology working under grants from the National Institute on Aging.
Deciding to move into an independent practice and following his interest in audiology and mechanisms of human cognition, Dr. Magilen purchased a small hearing aid center in Vallejo, CA in 1982.
He has worked with many manufacturers through the years contributing critical reviews of both hearing aids and audiometric instrumentation.
Dr. Magilen has also developed an office management software, called MacHear™, using the Apple® Macintosh computer, and has founded Hearing Centers' Network™ for the network exchange of practical information within the hearing healthcare community.
The author wishes to acknowledge the support of many friends in the audiological and dispensing communities, and also the National Institute on Aging, National Institutes of Health, and U.S. Department of Health and Human Services for providing a grant to study the audiologic problems of the elderly.