MarkeTrak V Hearing Aid Industry Market Tracking Survey

1. MarkeTrak VHearing Aid Industry Market Tracking Survey Sergei Kochkin, Ph.D. Knowles Electronics, Inc. June 1999

2. MarkeTrak Topics • Demographic indices & trends • Customer satisfaction revisited • Hearing aids in the drawer • Subjective benefit

3. 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.

4. Hearing Aid Market Penetration

5. Hearing-impaired User & Non-user Population

6. Hearing Loss Population by Age GroupOwners versus Non-owners

7. Clinton Announcement Spurred “Baby Boomer” Potential Market Growth • Clinton news release 10/97. • Survey taken 11/97. • Age 45-54 hearing loss growth =23% • $60k growth =35% • Some college growth = 30%

8. Physician Screening for Hearing Loss During Physical Exam HIA Targeting with Physicians

9. Binaural Penetration Trend

10. Hearing Instrument Fittings by Perceived Profession

11. Hearing Instrument Fittings by Source of Distribution (1997) Perhaps one to watch

12. Third-party Payment Trend

13. Average Retail Price to Consumer +24% +11% +30% +12%

14. Age of Hearing Instrument Mean age of instruments: 1991 = 3.1 yrs 1994 = 3.7 yrs 1997 = 3.8 yrs

15. First Time User Rate Eddie Albert Ads FDA/FTC

16. Factors Influencing New First Time Users to Purchase • Factors less than 10% mentions: • Free HA (7%) • Price (6%) • Ad-magazine (5%) • HL Literature (3%) • Boss/co-worker (3%) • Newspaper (2%) • Direct mail (2%) • Ad - TV (1.5%)

17. Physician Recommendation Trends • 1989 - HIA advertising to physician. • Current initiatives: • Mfg. screening kit • BHI - physician handbook • BHI - Academy of Family Physicians • AAA Best Practice • Family doctor (Positive) • ENT (Negative)

18. Key Trends • Negative trends • hearing aid penetration • Static trends • hearing screenings by physicians • distribution penetration • Binaural penetration

19. Key Trends • Positive trends • third party payment • first time users • repeat purchase • retail price (??) • Clinton - motivation of “Baby Boomers” • 1 million new potential customers

20. Customer Satisfaction Revisited

21. 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)

22. 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%)

23. Customer Satisfaction by Age of Hearing Instrument

24. Amount of Time Spent CounselingNew Users of Hearing Instruments

25. Customer Satisfaction as a Function of Time Spent with New Users

26. Multiple Environmental Listening Utility (MELU) is Critical to Satisfying Consumers

27. Perceptions of Benefit as a Function of Multiple Environment Listening Utility (MELU)

28. 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

29. Quantifiable COSI - Strong Predictor of Perception of Benefit

30. U.S. Customer Satisfaction TrendsNo significant differences (H.A. 1-5 years.)

31. U.S. Customer Satisfaction New Hearing Instruments (<1 year) • Declines (+5%) • Battery life • Adjust. V.C. • Value ($$/performance) • Gains (+5%) • Visibility • Localization • Outdoors • Place worship • Telephone • Post fitting service

32. 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)

33. 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

34. The introduction of CICs Probably Caused Post-purchase Cognitive Dissonance with Visibility of Instrument

35. 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

36. Overall satisfaction by Style of Hearing Aid

37. 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

38. 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?

39. Customer Satisfaction by Perceived Level of Hearing Loss

40. 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

41. 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.

42. What about the volume control? • 9% report they have none. • 37% want one. • Big differences on satisfaction. • Should make sure consumer can live without a volume control.

43. The Binaural Advantage(Rated higher on 15 attributes)

44. The Telecoil Advantage(Rated higher on 8 attributes)

45. The Programmable Advantage(Rated higher on 37 attributes)

46. 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)

47. 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

48. 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

49. Hearing Aids in the Drawer

50. 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.