Editor's Message: Using Market Segmentation to Identify Underserved Populations

Author: Brian Taylor, Au.D.

As 2019 comes to a close and we inch closer to the FDA’s codification of over-the-counter (OTC) hearing aids, which is expected to occur in 2020, it’s a good time for clinicians and business managers to create a strategic plan that addresses some of the potential disruption to the market for traditional hearing aids, sold through the professional channel. Several articles in this issue will provide some valuable food for thought as you develop your own strategic plan. Let’s take a closer look at who might benefit from devices sold directly to consumers. In addition to OTC hearing aids, consumers can purchase OTC hybrid devices, sometimes known as hearables. These hybrid devices combine the features of consumer headphones with some of the essential features of traditional hearing aids. Hybrid devices (hearables) usually have a core function and several secondary functions. The core function and the secondary functions vary with the person who is wearing the device to essentially make any hearable, by definition, a multi-tasking device. For example, the core feature of a hybrid device could be listening to music from a favorite streaming service on your smartphone several hours per week (this is the primary reason the consumer bought the device in this scenario). However, a few times per week the hybrid device is used to talk on the phone, measure steps while exercising and amplifying conversation in a crowded, noisy restaurant – all secondary functions. Similar to high-end consumer audio headphones, these hybrid devices range in price from around $100 to over $500 dollars, much less expensive than traditional hearing aids.
Figure 1. Segmentation of the population of people with auditory dysfunction. A PTA>25 dB HL indicates audiometric hearing loss. Population segments optimal for hearable devices, hearing care professional (HCP)-fit hearing aids, and OTC hearing aids are noted with arrows.

The challenge for the business savvy audiologist is knowing if these hybrid devices are worth offering to patients in your practice. The first step to better understanding if you want to provide these type of low margin devices in your clnic is to segment the market for hearing loss. Figure 1 above, created by Dr. Brent Edwards of NAL, shows three different devices that correspond with three different segments of the market. (Note in Figure 1 there are actually five segments of the market with the bottom two segments depicted in the figure perceiving no difficulty with their hearing and thus not yet in the market for purchasing any type of hearing device – even though one may be needed.) Segment 1 are individuals with pure tone averages better than 25 dB HL and self-perceived hearing difficulty. According to some research, published in 2015 at Ear and Hearing, about 26 million Americans fall into this segment: They have essentially a normal audiogram but complain of an inability to hear, primarily in noisy places. Historically, because they have normal hearing, audiologists do not fit them with hearing aids, but with the advent of hearables, this could be a market segement worth pursuing.

Segment 2 is comprised of individuals with worse than a 25 dB HL pure tone average with a self-perceived hearing problem. These are the 10-12 million Americans, hearing care specialists around the country are already serving quite well, according to the recently published Marketrak 10 report. Segment 3 are individuals with the same degree of hearing loss as those in Segment 2, but for some reason, reject the services of an audiologist. This is the segment of the population that may gravitate toward OTC hearing aids. It is likely another 8-10 million Americans might fall into Segment 3. Experienced clinicians also know that a relatively large number of people within Segment 3 have complex communication problems and will eventually need counseling, as well as other types of professional services provided by audiologists. Perhaps many of the individuals comprised of Segment 3 will prefer to dabble with amplification from the comforts of home and seek the services of an audiologist after experiencing some difficulties with their OTC device.

The upshot of Edward’s segmentation schematic is there are three segments of the existing market for amplification devices and audiologists today have build businesses that address just one of them (Segment 2). For some practices, this may be enough to stay busy and generate a sustainable profit; for others their strategic plan needs to account for fresh marketing tactics that resonate with a different group of consumers, the provision of hearables and unbundled professional services for those who first choose to purchase OTC and then find themselves in need of service and support.