If you’ve been following our series on hearing aids, you know that this is a huge market with skyrocketing growth potential. Consider these stats; There are 35 million U.S. consumers that could benefit from a hearing aid, and only a quarter of them actually wear them. (Why? They’re darn expensive!) Also consider that the first wave of Boomers (79 million strong) just started turning 65. The walkman generation that started pluggin-in 33 years ago is going to turn this market… (get ready for it)… on it’s ear!
Kaiser Health News suggests that “Only a quarter of the 35 million U.S. adults who could benefit from hearing aids actually get them, and one of the main reasons is money”. – From The Senior List article “How To Choose A Hearing Aid“
Newcomers To The Hearing Aid Market
There are some interesting challenges going on in the hearing aid space that could spark some disruption in this market. First; Costco saw the writing on the wall, and recently began selling hearing aids through Costco Hearing Centers. This is great news for consumers. When you combine Costco’s BUYING POWER with a committed focus on QUALITY CUSTOMER SERVICE, every market tunes-in (and subsequently tunes-up.) This means everyone else that wants to stay in this game will have to sharpen their pencils, re-think their marketing strategies, and improve customer service in a big way.
The second big disruption in this arena occurred when two former Stanford classmates (Sam Tanzer and Ross Porter) formed an unlikely partnership. These two entrepreneurs saw a stale market with a ton of growth potential and decided to form Embrace Hearing, a company “making high-quality hearing aids available at affordable prices”. These guys seem to get it, and they’re applying start-up-muscle to solve the problems they see inherent in this space. Embrace Hearing cuts out the middle man, and keeps it simple. They offer just 3 options when ordering direct; a base model at $399, a mid tier model at $599 and a high end at $899 (*price per ear when ordering a pair). The higher the price point, the more features in the hearing aid.
Ross Porter (co-founder) tells The Senior List what he thinks is wrong with the current distribution model for hearing aids, and where he thinks it’s going; “Audiologists run loss-making businesses that are subsidized by the sale of hearing aids. When a customer pays $5,000 for hearing aids, he’s paying perhaps $100 for the manufacturer’s cost, $900 for the manufacturer’s profit margin, $1,000 for the audiologist’s time, and then $3,000 to cover the overhead of an inefficient, legacy brick & mortar distribution system that will ultimately be made more efficient by the spread of online distribution. It’s important to understand that audiologists are not price gouging — but given their high fixed cost structure, they literally cannot make hearing aids affordable without going out of business. But the world is changing, and patient needs – not audiologist needs – will determine how hearing aids are distributed in the future. We believe that online hearing aid retailers, like Embrace Hearing, will soon dominate the hearing aid industry, leaving audiologists able to do the medical screenings and testing they are trained to do, and not the salesperson job that they are forced into.”
“A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.” – Wikipedia
The Hearing Aid Market
The hearing aid market is past due for some disruption. Make no mistake about it- there are some fantastic, extremely competent, and caring folks working in hearing loss centers (all across the U.S.). The vast majority of these professionals go to work with one thing in mind. To make a difference in someones life by improving problems caused by hearing loss. Markets do what markets do… until they’re forced to correct, or to change course. They don’t change course unless there is a compelling reason to do so. This market is is a monster ($6 billion today & $8 billion by 2018 – CNBC reports) and there ARE compelling reasons for disruptive innovators to think about moving-in here… John F. Kennedy once said “Change is the law of life. And those who look only to the past or present are certain to miss the future.” Here’s to all the disruptive innovators out there looking ahead, and looking to shake things up a bit. – Cheers –