Audiologists - Dispensers - Consumers: What Do They REALLY Think About Hearing Health

1. Audiologists - Dispensers - Consumers: What Do They REALLY Think About Hearing Health Eric Timm Vice President, Marketing & National Sales Phonak USA Phonak U August 2009

2. Course Objectives • Describe how patients think about the category and the process of becoming a hearing instrument user • Outline the differences between how audiologists and hearing instrument specialists are motivated and how they think about the industry • Apply the insights from this study to how they approach their own practice behavior

3. Study Profile • Southeast • Northeast • Southwest • West • Midwest Focus group discussions were held early 2009

4. Screening Criteria • Consumers –- consumers were segmented into ‘Active Seeker’ and ‘User’ targets focus groups • Dispensers -– licensed and practicing Hearing Aid Dispensers • Audiologists -- earned a Masters, AUD or PhD advanced degree in audiology, and actively dispensing hearing aids

5. A Few Words About Focus Groups… • Qualitative research technique • Should not project to general population • Brings together 6-12 respondents • Relies more on group discussion than directed questions • Purpose: • Provide overall category information • Stimulate new ideas • Generate hypotheses for quantitative testing

6. Study Objectives • Gain a deeper level of insight and understanding of the attitudes and behavior of hearing aid professionals, uncovering the key triggers that drive Audiologist and Dispenser interest • Better understand customers’ and consumers’ tacit and emotional beliefs about hearing aid brands/products, including key factors that influence their attitudes and behaviors • Understand the consumer hearing aid decision-making process, specifically to determine what drives them to a particular Audiologist or Dispenser, and understand what information sources they evaluate in selecting a particular brand or device

7. What are YOUR Hypotheses? • Among Hearing Health Professionals: • Brand Perceptions? • Manufacturer Selection? • Switching Behavior? • Among Consumers: • Buying motivations? • Channel selection? • Information sources? • Brand perceptions ?

8. Key Findings Summary • ‘Users’ and ‘Active Seekers’ have similar impressions of the frustration of hearing loss; however, Users feel the emotions much more deeply than Seekers • Consumers are not aware of the difference between Audiologists and Dispensers, yet they appear to comprehend ENT (Ear-Nose-Throat) physicians are the most closely linked to the medical community • Consumers use word-of-mouth and the internet as sources of information to learn about hearing aids and brands, yet they turn to their professional for advice regarding the specific brand and model best-suited for their needs • Users are engaged with the category, yet have very little brand awareness / understanding; Seekers have even less brand awareness • Although Professionals are very aware of different brand alternatives, they perceive very little differentiation between the key players • Attention from a manufacturer’s representative appears to be the primary reason why Professionals use a certain brand, and will switch to a new brand

9. Consumer Detail

10. Consumers: Hearing Loss & Purchase Motivation • The physical symptoms of hearing loss are different for everyone • Other health issues often take precedence over dealing with hearing loss • ‘Users’ perceive hearing loss and its impact on their life differently from ‘Seekers.’ Similar themes include frustration, isolation, embarrassment and fear • Users “rely” on their hearing aids to help them live “normal” lives

11. Consumers: Hearing Loss & Purchase Motivation (II) • To make up for not being able to hear appropriately, Seekers engage in compensating behaviors that allow them to function as normally as possible while dealing with their hearing loss • Denial, vanity and cost are the major factors that delay a consumer from obtaining a hearing instrument • Younger consumers still in the work force adopt hearing assistance much sooner than retired consumers • Childhood hearing loss was especially traumatic for those who grew up 30-50 years ago

12. It’s personal

13. Consumers: Information Sources & Channel Selection • Consumers primarily use word-of-mouth as their means to learn about hearing aids • The internet plays an increasingly important role for information gathering, and even channel selection • While they may not use industry terminology, most respondents recognize there are a variety of hearing aid styles; yet they may not know the advantages and drawbacks of each style • Respondents, especially ‘Seekers,’ are largely unaware of the difference between Audiologists and Dispensers

14. Consumers: Information Sources & Channel Selection (II) • Channel selection may be driven by severity of hearing loss, as some consumers are forwarded from their ENT (Ear, Nose & Throat specialist) to an Audiologist working with the ENT • As Users need to replace their hearing aids, they are much more likely to consider alternate channels for subsequent hearing aids to decrease the cost of the instrument • Costco is an appealing provider of hearing aids

15. Consumers are looking for new solutions

16. Consumers: Hearing Aid Adoption, Usage & Satisfaction • Historical experience with lower-quality hearing aids drives impressions of current hearing instruments, and may delay Seekers from obtaining hearing aids • Aesthetics are a primary driver of hearing aid selection; in fact, some may select an instrument for aesthetics, regardless of performance • Usage behavior differs based on severity of hearing loss, as some respondents only have one instrument, or only use them for watching television, whereas others depend on their hearing aids all the time • Satisfaction with hearing aids is mixed; some respondents are overwhelmingly pleased with their instruments, whereas others complain they do not meet their needs

17. Consumers: Hearing Aid Adoption, Usage & Satisfaction (II) • A few Users complained their hearing aids are uncomfortable, whereas other Users professed they often forget they are even wearing them • There is little understanding that hearing aid performance is linked to the quality of the fit • Satisfaction appears to be linked to the frame of reference or expectations respondents had for their instruments before being fitted with a hearing aid • Price is a major dissatisfier • Seekers expect hearing aids to last “forever” whereas Users have become accustomed to four to five year life spans

18. Fitters have a major impact on consumer satisfaction

19. Consumers: Brand Perceptions • There is very little awareness of hearing aid manufacturer branding or advertising, although awareness of channel advertising and promotion increases when consumers are in the market for a hearing instrument. • Unaided brand awareness among ‘Seekers’ is extremely low, with only a few respondents recalling Siemens, Beltone and Miracle Ear • Users’ are generally only aware of the brand of hearing aid they have worn. • Users’ initial Brand selection is almost primarily driven by the recommendation of their fitting Professional • Users’ subsequent Brand choice is influenced by their experience and satisfaction with a particular brand, yet professional recommendation can trump this preference.

20. Branding is virtually nonexistent in this industry

21. Professional Detail

22. Professionals: Channel Review • Most Dispensers and Audiologists appear to be truly motivated by the desire to help people and the technology of hearing diagnostics and instruments • Dispensers entered the business from a myriad of paths, from entering the family business to answering a classified advertisement titled, “Closers wanted” • Many Audiologists “ended up” in the hearing side of the business as a result of disliking the speech portion of ‘Speech & Hearing’ university coursework • Audiologists are predisposed to think of themselves as more educated regarding hearing and hearing loss than Dispensers, but a few recognize Dispensers may have more practical instrument knowledge and experience than Audiologists

23. Professionals: Channel Review (II) • Although members of each community recognize there are “good and bad” representatives of each other’s field, tension nevertheless exists between Audiologist and Dispenser communities • Interestingly, Dispensers were more likely to refer to their clients as “customers” whereas Audiologists were more likely to refer to their clients as “patients” • Overall, professionals are dissatisfied with industry statistics that only 15-25% of those with significant hearing loss have hearing instruments

24. Shared motivations, different paths

25. Professionals: Marketing & Sales Approach • Audiologists and Dispensers have difficulty differentiating themselves from each other • Audiologists in a “medical model” operate differently from Audiologists in private practice who appear to think more like Dispensers • Audiologists may qualify their patient’s financial condition when recommending an instrument, whereas Dispensers are more likely to let customers decide from a variety of instruments • Dispensers are much more likely to attempt to get their customers in for check-ups every three months to assess their current instrument fit, but also to build the relationship with their customer

26. Professionals: Marketing & Sales Approach (II) • Word-of-mouth referrals are perceived as the most effective marketing tool • Several professionals also feel mining their database for direct mail is an effective marketing tool, yet they have mixed success with print advertising • Manufacturer co-op dollars are viewed as a significant opportunity to promote their business, and can impact the way a professional uses and promotes a manufacturer’s product line • Marketing effectiveness tracking is largely limited to gut feel, and asking patients to check a ‘how did you hear about us’ box

27. Marketing sophistication varies greatly, depending on type and size of practice

28. Professionals: Information Sources • Professionals use a myriad of sources to reach their required number of CEUs, such as manufacturer and industry seminars, and online coursework • One-on-one manufacturer rep. training is viewed as the most effective way for professionals to learn about hearing aids • Industry journals are also important sources of on-going information regarding the hearing and hearing aid industry, • Professionals also use manufacturer websites for product portfolio information • Professionals desire a better, more comprehensive, brand-neutral website to which they can direct consumers for information

29. Personal training is best

30. Professionals: Brand Switching Behavior • Professionals select (and de-select) manufacturers based on a variety of product and program elements, and will largely remain with their preferred manufacturer until they fall short on one or more of the following: • Track Record For Successful Patient Fits • Product Innovation • Software • Support Services • Representative Attention • Flexibility of Terms/Conditions

31. Professionals: Brand Switching Behavior (II) • Consistent, positive representative attention appears to be the most effective way to drive brand switching among professionals. • Nickel and dime charges for accessories can be annoying • Wholesale prices roughly 10-20% above or below market averages for similar equipment can also drive brand switching

32. Good products are important, but service trumps product

33. Confirmed Beliefs • Consumers are dependant on fitters and still have limited brand awareness • Key solution needs continue to be TV, phone and hearing in noise • No 20/20 hearing restorative solution yet • Fitters have limited exposure to brands outside their immediate experience and dispenser attitudes are often formed on aging perceptions • Fitters have high hurdle to switch…high risk associated with change • Critical differences between audiologists and HISs

34. New/Surprises • We have internet savvy consumers with a high level of frustration with current informational resources • Advertising/promotional activity is most effective when consumer is ready…timing is everything • Price resistance among consumers, driven by value dissatisfaction and competing consumer health priorities • Costco shoppers emerged as “smart buyers” within group discussions • Most consumers (except super users) wait until catastrophic failure to replace HIs

35. Discussion Points • Given the unique circumstances of each individual’s hearing loss, how do you elicit this information? • If denial, stigma and cost are major barriers…what are your suggestions to overcome? • How might audiologists and dispensers more effectively differentiate themselves? • What should drive manufacturer selection…product or service?