Hearing aid batteries remain an important source of profits for hearing care professionals. However, in recent years, there has been a gradual and troubling erosion of these sales away from the traditional professional sector toward retail, pharmacy, and mass merchandiser outlets. Part 1 of this article explores the hearing aid battery marketplace and asks four experts their opinions on the market and what dispensing professionals can do to increase their hearing aid battery sales.
At one time, most dispensing professionals thought of their battery sales as the second major profit center in their dispensing business, making up about 10%-15% of their profits. In fact, many dispensing professionals relied upon the sale of batteries to pay for their businesses operational costsincluding rent and utilities. Today, battery sales remain one of the best ways to establish customer loyalty and provide customer service. And there is little question that the products still serve as an excellent source for profits (see sidebar). But trends show that consumers are increasingly turning to retail outlets for their battery needs.
The Hearing Review asked four hearing aid battery experts to participate in a virtual panel discussion and speculate on the battery market and what hearing care professionals can do to improve their marketing and profits relative to battery sales. Participants included Tom Begley, director of sales at Rayovac Corp, Madison, Wis.; Asela Jayampathy, marketing director at PowerOne batteries, a division of Varta Microbattery GmbH, in Germany; Ernie Petrus, director of sales and marketing at Energizer, St. Louis; and Michelle Potorski, marketing manager at Duracell Activair, Boston. (Editors Note: Part 2 of this article will feature a discussion on new technology and related issues, featuring a number of battery industry engineers and technical experts.)
|Why Concentrate on Battery Sales?|
|This table, reprinted from Strasser & Begley4, illustrates the potential lost profit from
hearing aid battery sales based on both current and previous hearing aid customers over a
|*Based on A.C. Nielsen Panel Data and Rayovac estimates
Average retail dollar figure based on $1.25/battery and an average purchase rate of
Market Changes and Hearing Care Offices
While few reliable statistics exist on the size of the hearing aid battery market, it is estimated that 190-210 million of these batteries will be dispensed in the US this year. There are a little more than twice that number (about 450 million) dispensed annually worldwide, according to Rayovac Corp.
Hearing instrument unit volumes have remained flat for the last 5 years; however, hearing aid battery sales have increased moderately by about 5% each year during that same period, according to Duracell. One possible reason for this increase, says Potorski, is a heightened sense of activity around hearing aid batteries, with different manufacturers coming out with new products and promotions. Statistics show that about one-third of hearing aid batteries are sold in promotions, most occurring at the retail (non-professional) level.
Hearing aid battery sales are highly dependent on device sales, says Begley. Unless we can collectively get the hearing aid market jump-started again and convince more first-time users to purchase hearing aids, battery sales will continue to grow only at modest levels.
However, Begley says that hearing aid battery consumption is rising due to continued consumer preference for smaller hearing aids (eg, CICs) which require smaller battery sizes that have a shorter service life. With their demand for smaller devices, consumers, in effect, are pushing down the size of the batteries and energy capacities. Those hearing aid wearers who used to buy a Size 675 battery are now buying a Size 13, and Size 13 users are now buying Size 312. The smaller the battery, the shorter the battery life. However, quite honestly, as long as the hearing aid device market is flat, its unlikely well see any major growth in the battery market.
Unfortunately, the moderate increases in hearing aid battery sales in recent years have come from within the retail sectorsuggesting that hearing care professionals are losing out on an important profit center. Ernie Petrus estimates that the US hearing aid battery market is worth about $147 million in sales, with about 41% going to AC Nielsen-measured stores (eg, about 60,000 retail outlets), 22% to other retailers (eg, warehouse outlets like Costco and Sams Club, Walmart, Radio Shack, and other non-Nielsen stores), while about 37% of hearing aid battery sales originate from the professional distribution channelaudiologist and hearing instrument specialist offices. For comparison, a 1990 National Family Opinion poll indicated that 44% of all hearing aid batteries were purchased through dispensers.1
When taking into account the AC Nielsen numbers, it would mean the average hearing care office is realizing about $4500 per year on hearing aid battery sales. The 1999 HR Dispenser Survey2 indicated that the average gross revenue from batteries was 5%, or $5000-$12,000 per officedown by half from a 1987 survey that indicated 10% of gross revenues from battery sales.3
Are Battery Sales Being Drained Away from Professionals?
In terms of distribution, there has been some channel blurring going on, says Petrus. He notes that hearing aid battery sales have traditionally gone hand-in-hand with pharmacy sales because of the shared customer demographics for the two markets: about 70% of all prescriptions go to people who are age 50 or older, and about 80% of all hearing aid users are age 50 or older. He says that, as pharmacies become more prevalent within mass merchant and grocery stores, so will hearing aid batteries.
Retailers like hearing aid batteries because of the demographics, says Petrus. Carrying hearing aid batteries further positions them as a home health solutions provider. Older adults are their target audience, and the batteries build store traffic.
Pharmaceutical chains [and the large retail chains that contain pharmacies] have increased their presence in hearing aid battery sales, adding private label lines and widening their offerings, says Jayampathy. This represents a large attrition of customers away from hearing instrument dispensers who used to buy batteries from them, and are instead now utilizing these nearby pharmacies.
The frequent purchases of hearing aid batteries and positioning for the lucrative Baby Boomer market are two more big incentives for these retailers. According to Petrus, Energizers research shows that the average hearing aid user buys 16 batteries every 2 months, or 96 batteries a year. Little wonder why pharmacies and retailers like hearing aid batteries; people keep coming back for them.
Additionally, consumers themselves are different than those in the past, says Petrus. People age 70 and older are part of what is called the accepting generation. If theyre instructed to purchase batteries from your office, they listen and usually accept that idea. Baby Boomers are not like that; they like to have information and then make up their own minds. Theyve also developed loyalties with the mass merchants and the brands they carry, as evidenced by the fact that theyre shopping at these stores on a consistent basis. As these large retail companies look ahead to the Baby Boomer population, they know that competition will become fierce to gain their loyalty. With the 12-14,000 hearing care offices/practices in the US, its easy to see that dispensing professionals are outnumbered by the 60,000-plus retail outlets carrying batteries. There is a convenience factor that professionals need to recognize and overcome.
Our message to dispensing professionals is, essentially, Hey, listen, we need to wake up to some new realities and take appropriate action, continues Petrus. Things arent as theyve always been. Your battery sales may be drying up in front of you. What weve shown is that, if you look at the number of hearing aids sold over the last 3 years, the market is flat. However, the Nielsen retail market has grown by about 23%. From where is that business coming? Its at the expense of dispensing professionals. And the competition is only going to get tougher because there are more of these retail outlets being established. As it is now, the total number of pharmacies is fairly flat. But mass merchants are growing, and other retail outlets and grocery stores are adding pharmacies…So, the opportunity for consumers to buy from these stores will only increase.
Strategies for Improving Battery Sales and Profits
If hearing care professionals are losing out on profits from battery sales, and retail outlets are gaining in market share, what can be done to combat the trend?
One thing you cant control is that the consumers are in retail-type settings more often than theyre in your office/practice, says Petrus. But the biggest thing is that audiologists and hearing instrument specialists are not giving the consumer a choice in batteries. In a survey we did, 90% of dispensing professionals carried only 4 units of sale: 1 brand of Size 10, Size 13, Size 312, and Size 675 batteries. By contrast, if you visit a major retailer, the average store will carry three different brands in about 18 different packages. Theyre giving consumers a selection. The consumer is given a choice between 8-packs, 12-packs, and 16-packs. Theyre also giving consumers more packaging solutions with products like Energizer EZ Change or Duracell Easy Tab.
Dispensing professionals need to start offering consumers a choice. They are positioning themselves as the experts, and there is a credibility involved in providing for different peoples needs. If you went into an optometrists office for a pair of glasses, they wouldnt provide only one pair of frames for you to choose from. If youre relying on an expert, you expect a number of solutions from that expert.
Petrus says that retailers arent just carrying hearing aid batteries; theyre offering a superior selection, and making batteries very visible and prominent in their stores:They are giving consumers choices, and letting them vote with their dollars.
Duracells consumer research indicates that there are a combination of factors that play into a consumers choice of a hearing aid battery, according to Potorski. These include: 1) Pricequite often, it is a fixed income consumer purchasing the batteries; and 2) Brand loyalty. So one of the things we like to emphasize to dispensing professionals is the need for offering a choice in products. This is something that the retail world is quite good at. Ultimately, a choice of brands will benefit the hearing healthcare professional.
Why? Because brand awareness and loyalty remains an extremely important component in sales, says Potorski. Consumers do find comfort in brands, and our consumer data suggests that brand loyalty is an important component in the hearing instrument product itself. Toward that end, Phonak Inc. and Unitron Hearing have become the exclusive distribution partner for Duracells hearing healthcare activities. She explains that Duracell has worked with Phonak to take advantage of the hearing instrument manufacturers established distribution network, broaden Duracell Activair distribution, and improve battery-related service levels.
Certainly, the major advantage that dispensing professionals have over retail outlets, continues Potorski, is that the consumer is making an assisted purchase, and it is something of a personalized sale, where a consumer obtains a one-on-one recommendation and information that he/she wont necessarily get from a retailer. Toward that end, I do also believe that, when looking at pricing of batteries, there is a certain premium that can be charged for that type of service, as long as the dispensing professional is careful not to let the pricing gap get too wide relative to the competition. Similarly, loyalty programs are important to keep the clients coming back to the office/practice for their batteries. Potorski also recommends that hearing healthcare professionals employ a dual-brand strategy to include a lower-priced offering and a more premium option where they can leverage brand names or value-added elements.
Jayampathy contends that the best way for dispensing professionals to combat the rise in retail sales is to market a battery line that is exclusive to hearing care dispensing offices: If you talk with traditional dispensers and entrepreneurs who once made good profits on hearing aids, says Jayampathy, they are not just struggling to sell batteries to existing customers, but sometimes even to those who are first-time purchasers of hearing aids. He believes customers are buying from retail outlets primarily due to convenience and brand loyalty. By selling only the brand name, you can lose battery customers, because in my view, youre just creating a market for retail outlets like Walmart and Walgreens. Jayampathy says that the key is to offer one premium battery line not carried by the retail giants that covers the entire gamut of hearing devicesfrom moderate to high powerwithout charging a premium for the high-power applications.
Rayovacs Begley believes the answer to increasing battery sales for dispensing professionals is in using common sense, good marketing, and a quality product, and he ticks off a list of dispensing professionals who have found that simply spending a little time focusing on battery sales generally yields good results. Its true that there has been some slippage in the professional side [market share] relative to dispensing batteries in recent years, he says, suggesting that this is to be expected with the relatively new focus on high-end digital aids which have made a large impact on the overall economics of dispensing. At one time, dispensing professionals had 100% of all hearing aid batteries. And, today, retailers have become more aggressive in marketing hearing aid batteries. But hearing care professionals can compete vigorously with any of the given retailerswhether youre talking about drug, discount, or food stores. It boils down to using simple marketing techniques and a little common sense.
Begley cites seven strategies that will ensure the success of a business/practice relative to marketing batteries:
1) Include batteries in the patient checklist. When talking about maintaining hearing aids, make it a point to talk about the need for quality batteries;
2) Use a battery club. He says those offices/practices utilizing a battery club sell 20% more batteries than those that do not;
3) Offer a competitive price. For the most part, says Begley, dispensing professionals batteries are competitive with the retail storesincluding the biggest one in the world, Walmart. As long as the batteries are competitively priced, it will be possible to gain sales. Dont give your batteries away.
4) Encourage front-office staff to ask about batteries. A simple statement like, By the way, do you need batteries? will increase sales exponentially in some cases. Often, businesses reward the front-desk people for helping sell batteries.
5) Use manufacturer/distributor signage and displays. When you walk into a grocery store, you shouldnt have to ask the grocer where the food is, says Begley. Similarly, batteries should be displayed in the office because people wont buy from you what they cant see.
6) Develop a marketing partnership with your battery supplier. The battery manufacturers know how to sell batteries, and they are adept at developing promotions, communication methods, and other tools that will help you sell batteries, says Begley. Use them!
7) Custom imprinting. Custom imprinting gets your name, address, and phone number in the mind of the customer and combines it with a respected brand name. This reinforces your commitment to quality, and keeps your practices name on top of your customers mind.
Finally, the most important point is that you have to have a commitment to sell batteries, and be interested in looking at batteries as part of your overall practice, says Begley. Batteries are a tool. If youre an entrepreneur who wants to procure a good portion of the market share in your local area, why would you possibly allow someone else take your battery businesssales that you should already have? And, if you lose those battery sales, what guarantee do you have that the same customer might not go somewhere else for his/her hearing devices?
The Utility of Battery Clubs
Everyone interviewed for this article agreed that battery clubs are an effective way to boost battery sales. Rayovac reports that those dispensing offices who maintain a battery club sell 20% more batteries than those offices that do not maintain one.
Battery clubs can, and do, play important roles when done well, especially if theyre not too complicated says Potorski. They can also assist in developing the loyalty of customers.
Petrus says battery clubs appeal to people because theyre looking for value. Promotions are important to provide the incentive for consumers to come into the practice. It should be remembered that consumers are making a special trip into the practice to get batteries in many cases. Roughly one-third of all the batteries purchased in the Nielsen measurements, for example, are purchased in promotions.
In the last couple years, significant changes have been made to hearing aid battery packaging in order to make it easier for people to place the batteries inside the battery door of the hearing instrument. Additionally, larger quantity package sizes have become more common.
Petrus says Energizers research suggests that the average hearing aid wearer is buying 96 batteries per year, which means there are a lot of batteries that ultimately go unused. We figure the average user can only use around 52 batteries per year, says Petrus. So, there are three plausible explanations: 1) Theyre not using the full energy life of their batteries due to the difficulty and/or potential embarrassment of changing the batteries in public; 2) Theyre losing many of the batteries; and/or 3) Theyre pantry loadingplacing a stock of batteries in their glove compartment, the office, various places at the homeso theyll always have a supply in an emergency.
Petrus says that this information was responsible for the evolution of the Energizer EZ Change packaging which is designed to allow easier access and more reliable replacement of hearing aid batteries. We not only introduced the solution with the packaging, but we went on TV because we knew it was such a visual product. Petrus says the commercials have won an EFFIE award, the highest result-driven award for television commercials. Whats happening is that consumers are looking for it. And if dispensing professionals dont have it on display, there is a good chance that the consumer will purchase it at a retail outlet…When we came out with [EZ Change], it was with the knowledge that we would always keep spin-packs in our line to offer a choice. Some consumers are comfortable with spin packs. Because of this, we are the only company with measured growth in the Nielsen marketplace, 90% in the last 18 months, and we attribute this largely to the ability to offer both EZ Change and spin packs.
Duracells Potorski agrees that packaging has played a role in recent successes. Virtually all of the major manufacturers have come out with new packaging innovations during the last couple years, and I think youll continue to see a focus in this area. With the Duracell Activair Easy Tab, consumers have responded positively to the ease of insertion associated with the longer tabs. The convenient dispensing case, which makes it easier for consumers to carry and remove the batteries, has been found by consumers to be an important value-added feature…I think youll see a continued effort by battery manufacturers, in general, to focus on making the use of batteries and changing batteries easy and convenient, as well as enhancing the entire experience of using the product.
While Rayovacs Begley says that the new packaging is important for some consumers, he believes that the dial pack is still, by far, the preferred mode of packaging and will remain so. At Rayovac, our research suggests that packaging is pretty far down the list in terms of a consumer hot button. However, handling is important. We believe the market research indicates that wearers are looking for simple solutions. Batteries are a well-known consumer product, and they have been around for a long time; in fact, Ben Franklin coined the word battery. We think that consumers want a simple design. Any time you need a video or detailed instruction booklet that shows you how to use a hearing aid battery, I think the process has been over-complicated. Thats not to imply that consumers dont find these designs useful; however, most people still like the dial card.
We believe that the consumer does benefit from a slightly longer tab which weve incorporated in Rayovac ProLine, continues Begley. But frankly, the battery dial continues to be the most popular type of packaging available. Even with all the new packaging designs, the dial pack is still probably about 70% of all the hearing aid battery purchases.
Potorski notes a migration toward larger pack sizes. In general, she says consumers are finding there is some value and savings associated with the larger quantity packs, and Duracell has seen this trend across the entire hearing aid battery market.
In Part 2: A look at evolving battery technology, possible future research and development avenues, and a review of the upcoming IEC standards for batteries.
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